Health Savings Accounts (HSAs)

As of January 2004, individuals under age 65 are eligible to
establish and contribute to a new type of health care savings
account under a qualified health plan. The HSA plan allows
individuals to accumulate funds on a tax-favored basis to cover
medical expenses.

Annual contributions of up to 100% of an individuals health plan
deductible can be made to an HSA. (Please contact us for
contribution limits). Earnings in HSAs grow tax free and account
beneficiaries can make tax-free withdrawals to cover current and
future healthcare expenses including retiree health insurance
premiums, medicare expenses, prescription drugs, qualified long
term care services and COBRA coverage. Nonqualified
withdrawls are subject to income taxes and a 10% penality (just
like an IRA). HSAs are portable and can be moved from employer
to employer and assets can accumulate from year to year. Also,
assets can be transferred to a spouse tax free in the event of

HSAs are a terrific way for small employers to reduce
health insurance expenses while continuing to provide
excellent health benefits to employees. Contact us to
learn more.

Health Savings Accounts
Life & Health Insurance Agency, Inc.                                      1-908-231-0303