A Health Savings Account (“HSA”) is a tax-exempt trust or custodial account created for the purpose of saving and paying for qualified medical expenses in connection with a High Deductible Health Plan (HDHP).
An HSA is established for the benefit of an individual, and is “portable.” This means that if you change employers or leave the work force, the HSA stays with you rather than with your former employer. Your HSA at UMB Bank, n.a. is a custodial account that consists of all funds you and your employer contribute to your HSA, all investments you make with or through custodian using those funds, and all earnings on those funds.
An “eligible individual” may establish an HSA. An “eligible individual” means, with respect to any month, an individual who:
An HDHP is a health plan with an annual deductible for an individual (self only) or a family (coverage for more than one individual) that meets the minimum deductible amount published annually by the U.S. Treasury Department.
In addition, the annual out-of-pocket expenses required by the plan do not exceed the out-of-pocket maximums published by the U.S. Treasury Department. Out-of-pocket expenses include deductibles, co-payments, and other amounts the participant must pay for, covered benefits, but do not include premiums or amounts incurred for non-covered benefits (such as amounts in excess of usual, customary and reasonable amounts, and financial penalties).
A plan does not fail to be treated as an HDHP merely because it imposes a reasonable lifetime limit on benefits provided under the plan. In such a case, amounts paid above a lifetime limit will not be treated as out-of-pocket expenses in determining the annual out-of-pocket maximum.
A plan does not fail to be treated as an HDHP merely because it does not have a deductible (or has a small deductible) for preventive care. For this purpose, preventive care includes such items as periodic health evaluations, routine prenatal and well-child care, child and adult immunizations, tobacco cessation programs, obesity weight-loss programs, and certain screening services.
An HDHP may be offered by a variety of entities, including insurance companies and Health Maintenance Organizations (HMOs).
You are ineligible for an HSA if you are covered under another health plan (whether as an individual, spouse or dependent) in addition to your qualified HDHP, except as provided below.
You remain eligible for an HSA if, in addition to an HDHP, you have any one or more of the following:
You may also have coverage under an Employee Assistance Program (EAP), and you may have a discount card that enables you to obtain discounts for healthcare services or products at managed care market rates.
An HDHP can be provided as part of a cafeteria plan and can be used in conjunction with an HSA. The HSA can be established under a cafeteria plan.
An employer may offer an HSA mid-year as a new benefit under a cafeteria plan, and allow you to elect an HSA, so long as your election for the HSA is made on a prospective basis. In such a situation, however, you may have other coverage under the cafeteria plan that cannot be changed (e.g., coverage under a health flexible spending account) that may prevent you from being an eligible individual with respect to the HSA.