Finding Health Savings Accounts
"We will strengthen health savings accounts -- by making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get. We will do more to make this coverage portable, so workers can switch jobs without having to worry about losing their health insurance." - George W. Bush, State of the Union Address, Feb 1, 2006.
Establishing a Health Savings Account (HSA) is similar to setting up an Individual Retirement Account (IRA). You do not need permission from the IRS or any other regulatory agency.
First you have to enroll in a qualified High-Deductible Health Plan (HDHP). Your Health Savings Account (HSA) administrator will require documentation of your enrollment in a HDHP.
If you terminate HDHP coverage, you can maintain your HSA, but you will not be eligible to make additional HSA contributions. If, at a later date, you re-enroll in an HDHP, you will be able to resume HSA contributions.
Combined HSA and HDHP Services
Some insurance companies, such as Fortis and Golden Rule, can provide the High-Deductible Health Plan (HDHP) and provide Health Savings Account (HSA) administration services. This conveniently allows you to complete a single set of application documents for both the HSA and HDHP. When you are approved for HDHP coverage, the insurance company automatically establishes your HSA.
Stand-Alone HSA Administration Services
If you prefer stand-alone Health Savings Account (HSA) administration, you will need to submit the proper enrollment forms, submit required payments and provide documentation of your enrollment in a qualified High-Deductible Health Plan (HDHP). The HSA administrator can provide you the correct forms.
HSA Enrollment Form
Some HSA administrators have electronic enrollment forms accessible through their websites, or they may present their enrollment forms in pdf format, which you can conveniently download and print. In comparing HSA administrators, you can learn a lot by reviewing the respective enrollment forms.
This website does not endorse or recommend specific HSA Administrators
HSA administration is a new and rapidly changing area of financial services. New vendors are continually entering the business. Which HSA administrator is right for you? It depends on your unique circumstances and preferences.
Section 3(1) of the Employee Retirement Income
Security Act of 1974 (ERISA) defines the term "employee welfare benefit
plan" in relevant part to mean "any plan, fund, or program . .
. established or maintained by an employer . . . to the extent that such
plan, fund, or program was established or is maintained for the purpose
of providing for its participants or their beneficiaries, through the purchase
of insurance or otherwise, (A) medical, surgical, or hospital care or benefits,
or benefits in the event of sickness . . . ."
Section 1201 of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, Pub. L. No. 108-173 (the Medicare Modernization Act), added
section 223 to the Internal Revenue Code (Code) to permit eligible individuals
to establish Health Savings Accounts (HSAs).(1) In general, HSAs are established
to receive tax-favored contributions by or on behalf of eligible individuals,
and amounts in an HSA may be accumulated over the years or distributed on
a tax-free basis to pay or reimburse "qualified medical expenses."
In order to establish an HSA, an eligible
individual, among other conditions, must be covered under a High Deductible
Health Plan (HDHP).(2) Contributions to an HSA established by an eligible
individual who is an employee may be made by the employee, the employee's
employer or both in a given year.(3) Amounts in an HSA may be rolled over
to another HSA.(4) If an employer makes contributions to HSAs, the employer
must make available a comparable contribution on behalf of all eligible
employees with comparable coverage during the same period.(5) However, employers
that make contributions to an employee's HSA are not responsible for determining
whether HSAs are used for qualified medical expenses or for investing or
managing amounts contributed to an employee's HSA.(6)
HSAs are personal health care savings vehicles rather than a form of group
health insurance. For example, funds deposited in an HSA generally may not
be used to pay health insurance premiums,(8) and the beneficiaries of the
account have sole control and are exclusively responsible for expending
the funds in compliance with the requirements of the Code. Because of these
differences, we regard court precedent on the significance of employer contributions
to group or group-type insurance arrangements as inapposite to HSAs. In
the group health insurance context, the employer, whether by choosing an
insurance policy or creating a self-funded program, typically establishes
the type of benefits provided, the conditions for their receipt, and the
manner in which claims will be adjudicated. In the context of HSAs, however,
the employer may be doing little more than contributing funds to an account
controlled solely by the employee.
Accordingly, employer contributions to HSAs give rise to an ERISA-covered
plan where the establishment of the HSAs is completely voluntary on the
part of the employees and the employer does not: (i) limit the ability of
eligible individuals to move their funds to another HSA beyond restrictions
imposed by the Code; (ii) impose conditions on utilization of HSA funds
beyond those permitted under the Code; (iii) make or influence the investment
decisions with respect to funds contributed to an HSA; (iv) represent that
the HSAs are an employee welfare benefit plan established or maintained
by the employer; or (v) receive any payment or compensation in connection
with an HSA.
HSAs now include reimbursement for preventative care and some prescription
drugs.
The difference between MSAs and HSAs
The industry organization American Association of Preferred Provider Organizations
(AAPPO) claims that 95% of HSA participants use PPOs. They have their reasons
for pumping up the relevancy of PPOs of course, but they say they got their
numbers from a study of 100 health care plans. AAPPO also estimates that
10 million people are in CDHPs: 4.5 million in HSAs and 5.5 million in health
reimbursement accounts.
Economists at Brigham Young University developed a mathematical model of user choice and possible implications on policy. Their model shows HSAs can result in a case where both sick and healthy people are better off.
