An HSA is a tax-sheltered trust account that you own for the purpose of paying qualified medical expenses for yourself, your spouse, and your dependents. When you enroll in an HDHP, the health plan determines whether you are eligible for a Health Savings Accounts (HSA) or a Health Reimbursement Arrangement (HRA) based on the information you provide.

Your own HSA voluntary contributions are tax-deductible

Interest earned on your account is tax-free

Tax-free withdrawals may be made for qualified medical expenses

Unused funds and interest are carried over, without limit, from year to year

You own the HSA and it is yours to keep - even when you change plans or retire

Your HSA is administered by a trustee/custodian

An HSA plan may save you money through lower premiums, tax savings, and money deposited in your account that can be used to pay your deductible and other out-of-pocket medical expenses in the current year or in the future.

Generally qualified medical expenses will be determined by the plan in conformance with FEHB law and Section 213. See IRS Publication 502 for a list of qualified medical expenses which also includes over-the-counter drugs. Please note that some insurance premiums cannot be paid for by HSA funds.

The IRS defines qualified medical expenses. See IRS Publication 502 for a list of eligible expenses. However, over-the-counter medicines are considered qualified medical expenses even though they are not stated in the IRS Publication 502. Also, not all insurance premiums are qualified medical expenses even though they are stated in the IRS Publication 502.

Yes. Your HSA funds are invested. Depending on which HSA plan you are enrolled in, the interest rate and payment of interest will vary. Your earnings are tax free.

Yes. Your funds will accumulate without a maximum cap. However, the annual limit that can be contributed to the HSA is the HDHP's deductible, plus "catch up" contributions for those ages 55 to 65.

You own your account, so you keep your HSA, even if you change health plans or leave Federal government. However, if your HSA was fully funded and you leave the HDHP during the year, then you will have to withdraw some of the contribution from the account. You must pay income tax on your excess contributions and income tax on any earnings of the excess contribution. There is no 10% penalty on excess contributions.

If you no longer are enrolled in an HDHP you are not eligible to make contributions to your HSA, but you may request withdrawals for qualified medical expenses.

Yes, there will be administrative fees that will vary by plan.

First, you must elect a high deductible health plan. Generally, once the plan receives your enrollment, the plan will mail you an information packet that includes banking forms for you to complete and return to the plan. When the plan receives the completed forms, the plan will notify its administrator of the HSA. The HSA administrator will then set up your account and your health plan will deposit "premium pass through" payments into that account.

All plans offering an HDHP are required to have a financial trustee that can administer the HSA. However, you can decide which company will administer your HSA and what type of investments you can make with your account once it is established. Any investment allowed for IRAs is allowed for HSAs but you need to verify that the financial institution of your choice offers HSAs.

Yes. A Federally chartered credit union qualifies under Treasury Regulations as a trustee/custodian. However, you will need to check with your specific credit union. If your credit union functions as an HSA trustee/custodian, you can work with them in two ways: Submit your additional voluntary contributions, and Transfer funds from the trustee/custodian selected by your plan to the credit union.

You can invest the money in your HSA in bank accounts, annuities, certificates of deposits, stocks, bonds, mutual funds, certain types of Bullion or Coins (please see section 408(m)(3) of the IRS Code). However, your HSA custodian or trustee may offer only some of these types of investments.

The money market account portion of your HSA is normally insured by a Federal institution (e.g., FDIC, NCUA, etc.) Other types of investments, for instance, stocks, bonds and mutual funds, are subject to normal investment risk.

Your HSA would pass to your surviving spouse or named beneficiary tax free. If you are unmarried and do not have a named beneficiary, the money is disbursed to your estate and is subject to any applicable taxes.