What is a Health Savings Account?
A Health Savings Account (HSA) is an individually purchased account that can be used to provide reimbursement for future qualified medical expenses not reimbursed under the Group Medical Plan.
Who is eligible to purchase a Health Savings Account?
Anyone who:
- is enrolled in a qualified High Deductible Health Plan (for 2009, State Farm Agent Group Medical Plan Options 2A and 3A are qualified High Deductible Health Plans),
- is not enrolled in Medicare,
- cannot be claimed as a dependent on another person's tax return, and
- is not covered by any other health plan that is not a High Deductible Health Plan.
Where can I purchase a Health Savings Account?
An HSA can be purchased through many insurers and financial institutions, including State Farm. Of course, State Farm agents can sell HSAs to themselves and to their staff members through State Farm Bank. Contact State Farm Bank for additional information regarding the State Farm Bank HSA product.
Is there a maximum contribution for a Health Savings Account?
Yes, there is an annual contribution limit for HSAs. Persons interested in an HSA should consult the HSA administrator for information on the maximum contribution they may be eligible to make.
Are Health Savings Account contributions tax deductible?
Yes, HSA contributions are deductible in determining your adjusted gross income. What's more, the interest earned on the account is also tax exempt. However, if associates take non-qualified distributions from these accounts, those distributions are subject to taxation. If the non-qualified distribution occurs before the age of 65, there is also a 10% tax penalty.
What expenses are eligible for reimbursement under a Health Savings Account?
Most un-reimbursed medical expenses from the Group Medical Plan are eligible for reimbursement under an HSA. Associates who choose to purchase an HSA should check with their tax or legal advisor for complete details regarding qualified medical expenses. The HSA administrator is not responsible for verifying the eligibility of expenses reimbursed under a health savings account, so associates should keep in mind that account disbursements are auditable by the Internal Revenue Service.
What happens to the remaining balance in my account at the end of each year?
There is no "use it or lose it" rule for HSAs. Unused account balances are automatically rolled over from one year to the next.
How do I submit expenses for reimbursement from my HSA?
Associates will need to check with their HSA administrator (the insurer or financial institution from whom the HSA is purchased) to determine how expenses should be submitted for reimbursement. In some cases, proof of unreimbursed medical expenses needs to physically be submitted on a claim form. In other cases, debit cards or checks may be issued that can be used to pay directly for eligible medical expenses.
State Farm Bank currently offers a combination of methods. Associates can directly pay for qualified medical expenses using checks that are written against the account balance, or they can pay for medical expenses out of their own pocket and then write a check made payable to themselves. They may also submit a distribution request form to obtain reimbursement for those expenses.
Where can I find more information about a State Farm Bank HSA?
More information is available on State Farm.com > State Farm Bank > Bank Accounts > Health Savings Accounts or you may call the State Farm Bank Response Center toll-free at 877-734-2265.
