Released Oct. 4, 2007
BOZEMAN, Mont. -- Experts say many Montanans could save money by establishing a health savings account but are unsure if they are eligible, how to do it or how much they could benefit.
A new free publication from Montana State University Extension is intended to help people explore their options. The MSU Extension MontGuide, "Health Savings Accounts," will help you decide if you would benefit from one.
"The dramatic rise in health care costs in recent years has prompted Montanans to explore options to control their health care expenses," says Joel Schumacher, MSU Extension economics associate specialist and co-author of a newly released Extension MontGuide about HSAs. "Some people are combining a non-traditional high deductible health insurance policy with a federal Health Savings Account."
Schumacher says "HSAs" are special savings accounts that were established to allow eligible individuals to make deposits that can be used to pay for future qualifying medical expenses. Any funds remaining in the HSA at the end of the year may be used to pay for qualifying medical expenses in future years.
Qualifying medical expenses include health insurance deductibles and co-payments, long-term care costs, prescription and over-the-counter drug costs, dental expenses, eyeglasses and contact lenses.
"To be eligible for an HSA an adult must meet all of the following requirements," says Pat Brennan, a co-author from Rutgers University Extension. A person must have a qualifying high deductible health plan. A high deductible plan is one with a minimum deductible of $1,100 for an individual or $2,200 for a family. A qualified plan also must limit out-of-pocket expenses to $5,500 annually per individual or $11,000 for a family. A person cannot have any other non-HDHP coverage, although exceptions are allowed for accident, disability, dental, vision, and long-term care insurance. A person cannot be enrolled in Medicare. A person cannot be claimed as a dependent on another person's tax return.
The maximum amount that an individual can contribute to an HSA for 2007 is $2,850 or $5,650 for a family. Individuals who are age 55 or older are allowed an additional catch-up contribution of $800. HSAs can be established at banks, credit unions, insurance companies and other financial institutions that have decided to offer them.
"An individual will save on state and federal taxes by contributing to an HSA," says Marsha Goetting MSU Extension family economics specialist and co-author of the MontGuide. The total savings depends on the amount contributed and the individual's tax brackets. As an example, if a man contributes the maximum amount $2,850 to his HSA, he will reduce his federal income tax by approximately $713 and his state income tax by approximately $197.
The MSU Extension MontGuide "Health Savings Accounts" is free and can be picked up from your local County Extension office or printed from the Web site: http://www.montana.edu/wwwpb/pubs/mt200704HR.pdf. To receive a copy by mail send $1 to MSU Extension Publications, PO Box 172040, Bozeman, MT 59717.
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http://www.montana.edu/cpa/news/nwview.php?article=5193
Contacts: Marsha Goetting, (406) 994-5695, goetting@montana.edu
Joel B. Schumacher, (406) 994-6637, jschumacher@montana.edu
