Group Employee Health Savings Accounts Information - Small Business
New York - Pennsylvania - New Jersey - Florida
The Health Savings Account replaced Medical Savings Accounts on January 1, 2004.
All Americans under the age of 65, regardless of their employment status, now qualify
for an Health Savings Account.
Health Savings Accounts are expected to benefit small businesses by creating a health
care environment where employers, employees, and medical professionals all have a
stake in keeping costs lower.
Health Savings Accounts are designed to make health insurance more affordable by
combining a tax free savings account with a high deductible health insurance plan. It
allows for "before tax contributions" from employers and employees into a savings
account that can be used for medical expenses. The contributions cover first-dollar
medical costs until a health insurance plan deductible is met. High deductible health
insurance has lower premiums that are more affordable for employers and employees.
Employers can fund a Health Savings Account with an amount equal to the employees
deductible or split the cost with the employee, and the money can be used to pay health
care expenses. If the money is not needed, the money can be invested. Withdrawals
can also be made for non-medical purposes, but will be taxed as normal income and
are subject to a 10% penalty if done prior to age 65.
To be eligible for a Health Savings Account, an employee must purchase a health
insurance plan with annual deductibles of at least $1,000 for one person. Also, the
sum of the annual deductible and the other annual out of-pocket expenses required to
be paid under the plan (other than premiums) can not exceed $5,000 for one person.
** Click on the link below to fill out a quote request form for a health savings account
that benefits large employers, small business owners, and their employees. An
experienced business insurance agent in your state will contact you.
(NY, PA, NJ, & FL only)
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Group Employee Health Savings Accounts
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A Health Savings Account can be used to pay for many types of medical expenses, even some
that are often excluded on health insurance plans. These include the following:

Health insurance plan deductibles, copayments, and coinsurance
Prescription and over-the-counter drugs
Dental Services: including braces, bridges, and crowns
Vision Care: including glasses and lasik eye surgery
Psychiatric and certain psychological treatments
Long term care services
Medically related transportation and lodging
(NY, PA, NJ, & FL only)
Under most circumstances, Health Savings Accounts can't be used to pay health insurance
premiums. However, some exceptions are listed below. **

Health insurance premiums if you are receiving federal or state unemployment benefits
Premiums for COBRA qualified health insurance
Long term care insurance premiums
Premiums for a health plan (other than a Medicare supplemental policy) for an individual age 65
or older

**A Health Savings Account must be established before incurring any medical expenses or the
expenses will not qualify.
(NY, PA, NJ, & FL only)
Someone can contribute up to the annual deductible amount on their health insurance plan
each year, but the amount can't exceed $2,600 for an individual or $5,150 for a family. These
maximum amounts are for 2004 and will be adjusted each year.
Those between the ages of 55 and 65, can make an additional annual "catch up" contribution
of up to $500 in 2004.
(NY, PA, NJ, & FL only)
Employees are sent at the end of each year a statement showing the amount contributed to their
Health Savings Account during that year. As long as the amount contributed is less than or equal
to the maximum allowable contribution, that amount is an "above the line" deduction and can be
taken even if the employee does not itemize.

If you are self-employed, in addition to deducting your Health Savings Account contributions, you
may also be able to deduct 100% of your health insurance premiums. You must meet the criteria
listed below.

1. You are not eligible to participate in a subsidized health plan offered by an employer or your
spouse's employer.
2. The deduction does exceed the amount of net income from your business.
(NY, PA, NJ, & FL only)
Most Health Savings Accounts will provide a checkbook or debit card to pay for qualified medical
expenses.

1. Employees don't need to get approval from the Health Savings Account administrator to use
funds in their account.
2. Employees don't need to submit receipts to the Health Savings Account administrator, though
they will need to maintain the receipts for filling out their income taxes properly.
(NY, PA, NJ, & FL only)
No. Funds in a Health Savings Account are held in a trust and are administered by a bank,
insurance company, or other approved Trustee. You decide how your contributions are
invested in a Health Savings Account. Usually the options listed below are available.

Interest-Bearing Account
CD's
Money Market Funds
Mutual Funds
(NY, PA, NJ, & FL only)
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