Available Jan. 1, 2009

The first in a series of articles on HSAs

Need a way to plan and pay for your healthcare?

A Health Savings Account, or HSA, is a tax-favored account owned by the retiree in which the retiree and TVA can make contributions to pay for qualified medical expenses. The retiree can use an HSA to pay for current expenses or to save for future qualified medical and retiree healthcare expenses.

To participate in an HSA, a person must be enrolled in a qualifying high-deductible health plan. Beginning Jan. 1, 2009, an HSA will be available to retirees who participate in the Consumer-Directed Health Plan (CDHP). The HSA will replace the current Health Reimbursement Account (HRA) associated with the CDHP.

This is the first in a series of articles from Employee Benefits that will outline how an HSA works, how each retiree controls his or her own account, how to enroll, and more.

On Jan. 1, 2009, the CDHP deductibles will be changed to $1,150/individual and $2,300/family from the current $1,000/individual and $2,000/family. This change will meet the Internal Revenue Service (IRS) mandates to qualify the CDHP as a high-deductible health plan. The IRS indexes the deductible amounts annually.

An HSA gives retirees more control over how and when they spend their healthcare resources. The basics of a Health Savings Account are included below.

HSA basics

An HSA is like a bank account that lets you contribute tax deductible dollars to be used for qualified medical expenses, such as deductibles, co-insurance, prescriptions, dental expenses, vision care and more.

You own your HSA account. So you make such decisions as the following:

Whether to contribute to the account
How much to use for medical expenses
Whether to pay for medical expenses from the account or save for future use
What type of investment funds to select and more.

The money in your HSA belongs to you for life − even if you change medical plans, change your marital status or move to another state.

All the money rolls over each year. No money is forfeited or lost. So, an HSA can be a valuable savings tool.

You get triple tax savings. Your HSA contributions are tax-deductible, you earn tax-free interest on the account, and your withdrawals for qualified medical expenses are tax-free.

You can use a debit card or checks to pay qualified medical expenses. See IRS Publication 502 at www.irs.gov for a list of qualified expenses.

TVA will make a contribution to the account of $500/individual or $1,000/family after a retiree’s HSA is opened.

In order to be eligible for an HSA, you must meet the following requirements:

Must be covered under a qualified high-deductible health plan. This means you must be enrolled in the CDHP medical option to be eligible for the HSA.
Must not also be covered under any other health plan that is not HSA-qualified, such as a spouse’s health insurance plan. (Click here for more information about this eligibility requirement.)
Must not be enrolled in Medicare.
Must not be claimed as a dependent on someone else’s tax return.

Click here to access the newsletter that was mailed to retirees’ homes for more information.