A little about HSAs

To participate in a Health Savings Account, you must be enrolled in a compatible high-deductible health plan (HDHP). An HDHP is a health plan with an annual deductible of at least $1,100 for an individual and $2,200 for two or more family members. Maximum annual out-of-pocket for in-network expenses cannot exceed $5,600 for an individual or $11,200 for two or more family members. When you participate in an HDHP, you can set aside money in an HSA to pay for eligible out-of-pocket healthcare expenses. Money can be contributed to your HSA up to a maximum of $2,900 for single coverage or $5,800 for family coverage in 2008. Contributions to your HSA are tax-deductible at the federal level (pre-tax if made by your employer), and withdrawals are not taxed as long as they are used to pay for qualified medical expenses. Unlike flexible spending accounts, HSAs do not have a “use-it-or-lose-it” requirement. Your account balance plus investment earnings carry over from year to year — tax free.