Contributing to Your HSA                

When you participate in an HDHP; you set aside money to pay for eligible out-of-pocket expenses. Money can be contributed to your HSA by you
and/or your employer up to the amount of the deductible to a maximum of $2,700 single/$5,450 family for 2006. Contribution maximums are based
on monthly limits. For example, if you enroll in an HDHP on September 1 and your deductible is $1,200, you can contribute only $400 (4/12 of
$1,200). If you are age 55 or older, you can make an additional contribution amount of $700 in 2006. The additional amount increases by $100
each year until it reaches $1,000 in 2009. Like the annual contribution limit, this additional contribution limit is calculated monthly. The HSA cannot
receive contributions after the individual has enrolled in Medicare. Contributions to your HSA are tax-deductible at the federal level (tax-deferred if
made by your employer), and withdrawals are not taxed as long as they are used to pay for qualified medical expenses. State taxes vary - please
consult your tax advisor.

Contributions that your employer makes to your HSA are yours. There are no vesting requirements or forfeiture provisions. And unlike flex
spending accounts, HSAs do not have a "use it or lose it" requirement. Your account balance rolls over from year to year and may earn interest -
tax-free at the federal level at the federal level.

Investing Your Money

Federal law requires that contributions be deposited with a qualified trustee or custodian. As a qualified trustee, Wells Fargo holds your HSA
contributions exclusively for your benefit, ready for you to use whenever you have qualified medical expenses to pay. In the meantime, you have
the opportunity to make your HSA grow by investing it in your choice of six Wells Fargo investment funds. The funds range from a conservative
money market fund to a more aggressive stock fund. A brief overview of each of the available funds is provided in your enrollment materials.
Review the materials, and choose funds that best match your risk tolerance.

Using Your HSA

Money in your HSA can be used to pay for a variety of healthcare-related expenses ranging from routine physicals to prescription drugs. To pay
for expenses, you simply present your HSA Visa® debit card to your provider, and money will be deducted directly from your HSA. You may also
submit a claim manually via mail, or fax to receive reimbursement, typically within 4 business days.

Your HSA money is tax-free at the federal level as long as it is used to pay for qualified medical expenses. If you use the money for any other
reason, you will be required to pay income tax and a 10% tax penalty on that amount (you will not pay a penalty if you are disabled or age 65 or
older). It is up to you to keep the supporting records to show the Internal Revenue Service whether you used the funds to pay qualified medical

FAQ's                 IRS Resource Page

Q: Are HSAs and HDHPs the same?

A: No.  Health insurance companies provide HDHPs.  HSAs are offered through financial institutions.  Individuals who enroll in an HSA-eligible
HDHP may be eligible to open an HSA.  You should consult with a financial advisor to determine if you meet HSA-eligibility criteria and whether or
not an HSA and HDHP are a good fit for you financially.

Q: What types of insurance and other coverage can I have and still be eligible to take advantage of an HSA?

A: Permitted insurance includes worker's compensation, property insurance, insurance for a specific disease, such as cancer coverage, and
insurance that pays a fixed amount per day of hospitalization. Coverage for dental, vision, long-term care, accidents, and disability are also

Q: Can I use the money in my HSA to pay medical insurance premiums?

premiums or premiums payments that allow you to retain health coverage while you are receiving unemployment compensation.

Q: What is a qualified expense?

A: Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. These are
explained in Publication 502, Medical and Dental Expenses. However, even though non-prescription medicines (other than insulin) do not qualify
for the medical and dental expenses deduction, they do qualify as expenses for HSA purposes.

Q: Can my spouse and dependents use funds in my HSA account?  

A. Yes,  Qualified medical expenses are those incurred by the following persons.

    1. You and your spouse

    2. All dependents you claim on your tax return

    3. Any person you could have claimed as a dependent on your return except that:

    a. The person filed a joint return,

    b. The person had gross income of $3,650 or more, or

    c. You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2009 return.

Q: What if I use my HSA to pay for something other than a qualified medical expense?

A: You will need to include that amount in your gross income when you file your state and federal taxes. It will be treated as regular income and if
you are less than age 65, it will be subject to a 10% excise tax.
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How much will an HSA qualified insurance plan cost?
Participating in an HSA
To participate in an HSA, you must be enrolled in a high-deductible health plan (HDHP). An HDHP is a comprehensive health plan with an annual
deductible of at least $1,050 for an individual and $2,100 for two or more family members. Maximum annual out-of-pocket for in-network
expenses cannot exceed $5,250 for an individual or $10,500 for two or more family members.

To participate in an HSA, you cannot be covered by a low-deductible plan that provides coverage for a benefit that is covered by the HDHP.
There are two other requirements that you must meet in order to participate in an HSA. You cannot:

  • be enrolled for Medicare;

  • be a dependant on another person's tax return.
Already have a HSA qualified insurance plan?
TennHealth Recommends the following banks to manage your HSA account.
HSA Basics
Health Savings Accounts (HSAs) were first established in 2003 to provide Americans with an alternative to traditional
healthcare coverage. Since then, more than 6.1 million people have enrolled in HSA-qualified health plans and it's
not simply a passing trend: the U.S. Treasury Department estimates that 25 to 30 million Americans will use HSAs by

The concept underlying HSAs is consumer-driven health care. As its name suggests, consumer-driven health care
programs place greater control and responsibility in the hands of the consumers. In exchange, consumers are given
financial incentives to consciously and responsibly manage their medical expenditures. Proponents of the concept
believe that once consumers become active partners in the process, the healthcare industry will function like any
other market-driven system. And consequently, it will enjoy the same benefits of a market-driven system; namely,
competitive pricing, improved delivery of service, and continued innovation.