Guidelines for Setting Up a Health Savings Plan Bank Account
A health savings plan is a financial vehicle that allows you to set money aside throughout the year. In some cases, the money can be deducted from your earnings before taxes. The money can only be used to pay for qualifying medical expenses, such as health plan deductibles, premiums and medical equipment.
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Eligibility
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If you enroll in a high deductible health insurance plan that is compatible with the health savings account, you may enroll in a health savings account -- or HSA -- plan. Once you are enrolled in a compatible health plan, you can keep the health savings account if you terminate the insurance, according to MedPlanAccess.com. You are not allowed to make additional deposits to the HSA once you terminate health insurance coverage, however.
Qualifying Health Plans
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In order to be compatible with the health savings account, your health insurance plan must meet the IRS requirements to be classified as a high-deductible plan. According to Kiplinger.com, the 2010 IRS requirements state the plan deductibles must be at least $1,200 for individuals and $2,400 for families. Additionally, annual out-of-pocket expenses should not exceed $5,950 for an individual or $11,900 for families.
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Where to Enroll
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According to the U.S. Treasury Department, insurance consumers can sign up for a health savings account in a number of ways. If your insurance carrier offers a health savings account, you can enroll in a health savings plan with your insurance company. If your insurance is provided through your employer, you may also be able to sign up through your human resources office. Additionally, health savings accounts are offered through many banks and credit unions.
Enrollment Forms
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MedPlanAccess.com notes the enrollment process for any health savings account may vary depending on the administrator. Some health savings account administrators charge an administrative fee to set up and manage the account while others offer accounts free of charge. You will be asked to submit an enrollment form that may be faxed, mailed or emailed. Many health savings account providers also have electronic applications that can be submitted online.
Disbursement of Funds
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According to IRS.gov, you will be responsible for the cost of all your medical expenses until you have reached your plan's total deductible amount. Once your deductible has been met, you can begin receiving reimbursement from your health savings account by contacting the plan administrator. The distributions will be tax-free as long as they are used to pay for qualified medical expenses.
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References
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