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CHIP policy holders can choose a High Deductible Health Plan (HDHP) suitable for use with a Health Savings Account (HSA). The HDHP includes a $2,000 deductible for single, in-network coverage and a $4,000 deductible for single, out of network coverage. The HDHP-medical premium is approximately 10% less than the $2,000 deductible Preferred Provider Organization (PPO) premium. Click here to calculate your HDHP rate and compare it to your PPO rate. Click here to view a benefit comparison between the PPO and HDHP plans. Click here for additional HSA information. Note: Policy Holders can use their HSA funds to pay for:

  • Pool deductibles and coinsurance
  • Prescription drugs
  • Dental services
  • Vision services
  • Charges for medical expenses not covered under the pool
  • Long Term Care premiums
  • COBRA premiums

For more information about HSAs, and to find out whether or not you’re eligible to establish one, please contact your tax attorney or financial adviser.

HSA FAQ’s

What is a Health Savings Account (HSA)?
An HSA works like an IRA, except that money is used to pay health care costs. Participants enroll in a relatively inexpensive high deductible insurance plan. Then, a tax-deductible savings account is opened to cover current and future medical expenses.

The money deposited, as well as the earnings, is not taxable. The funds can then be withdrawn to cover qualified medical expenses tax-free. Unused balances roll over from year to year. Click here for additional HSA information

Who can qualify to open an HSA?
Everyone with a qualified high deductible insurance plan is eligible for a tax-deductible HSA (not just those who are self-employed or own small businesses).

What is the difference between a Medical Savings Account (MSA) and a Health Savings Account?
HSAs are a significant expansion of the current MSA program. Unlike MSAs, HSAs provide the following:

  • Everyone with a qualified high deductible plan is eligible to participate (includes the self-employed AND individuals who are not self-employed)
  • HSAs can be funded by the employer, employee or combination of both within the same calendar year
  • HSAs are permanent and portable.
  • HSA’s offer larger tax-deferred contributions to custodial accounts
  • HSA’s have broader deductible ranges.

What is a high deductible insurance plan?
A high deductible insurance plan is a health plan with a minimum deductible of $1,200 in 2012 (unchanged from 2011) for self-only coverage.

The maximum out-of-pocket expenses for allowed costs must be no more than $6,050 in 2012 (unchanged from 2011) for self-only coverage.

Can a MSA be rolled into a HSA?
Yes. MSAs can be rolled into HSAs on a tax-free basis, but it is not necessary.

What are the new maximum HSA contribution limits?
The 2012 maximum annual amount that can be contributed to an HSA is $3,100 for an individual, up $50 from $3,050 in 2011.

Does the HSA account need to be funded before year-end?
You have until the tax-filing deadline of the following year to make a contribution for the previous tax year.

Is there an age at which an individual must withdraw money from an HSA?
With an IRA or 401K once the person reaches 70 1/2 they are required to make withdrawals from the money in these tax-deferred accounts. That is not the case with HSAs. There is no requirement that withdrawals from an HSA begin at 70 1/2 (as there is with IRAs and 401Ks).

Is the HSA contribution prorated for the year?
Yes, if your plan isn’t effective for the entire calendar year, only the pro-rated portion of the maximum may be contributed and deducted. For example, if your plan is effective February 1st, you could contribute 11/12 of the maximum contribution limit.

Does the High Deductible Health Plan (HDHP) maximum Out-Of-Pocket (OOP) expense include the deductible?
Yes. Total OOP expenses including the deductible can be no greater than $6,050 in 2012 for an individual.

Can a policyholder continue to deposit into an MSA as long as the insurance plan is a qualified high deductible plan?
Yes. MSA policyholders have a lifetime right to their MSA custodial account under the rules.

What happens under the HSA law once someone becomes eligible for Medicare?

Once a person becomes Medicare eligible and is enrolled in the Medicare program, he/she can no longer contribute to an HSA.

However, he/she can use the accumulated funds to cover qualified medical expenses not covered under Medicare or his/her supplemental plan.

Can minors have a “self-only” HSA?

According to the Treasury guidance, minors who are claimed as a dependent on another person’s tax return are not eligible to have a “self-only” HSA. They can be covered by their parent’s or guardian’s HSA plan.

Does a person buying an HSA need to have “earned” income in order to deduct the contribution? Can they deduct it against “unearned” income (i.e. pension, investment, etc.)?
An individual who has less earned income (even no earned income) than his/her HSA contribution may still take the full above-the-line deduction.

Since HSA deposits can be made by anyone on behalf of the account beneficiary, who can legally take the tax deduction?
Contributions made by a family member on behalf of an eligible individual to an HSA are deductible by the eligible individual in computing adjusted gross income.

Are health insurance premiums considered a qualified medical expense?

Health insurance premiums are not qualified eligible expenses except for the following scenarios: qualified long term care insurance, COBRA and health care coverage while receiving unemployment compensation.

Funds can also be used to pay for Medicare Part A or B premiums (not Medicare supplement premiums).

Who can deduct premium payments from their taxes?
Today, only the self-employed can deduct any portion of their premium payments.

What does “first-dollar benefits, except for wellness” mean?
A high deductible health plan may still be federally qualified if it does not apply the deductible to preventive care benefits.

If a client files an extension on his/her taxes, would he/she have extra time to contribute money into his/her HSA custodial account?
The client could contribute until the tax filing deadline. An extension does not affect the amount that a client can contribute to the HSA.

Can clients roll funds from an IRA, HRA or FSA into an HSA?
Rollovers from an IRA, HRA or FSA are not permitted.

Can clients roll funds from an HSA into another investment vehicle, such as an IRA, HRA or FSA?
No.

If an unmarried insured has single coverage, can HSA funds be used to pay for qualified medical expenses for his/her dependents?
Yes.

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Nebraska CHIP is an affordable alternative for people who have been denied health insurance. CHIP Program members have access to professional medical care including hospice, newborn, organ transplants and occupational therapy.