What is a Health Savings Account?
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 may be opened to cover current and future medical expenses. The money deposited, as well as the earnings, is tax-deferred. The money can then be withdrawn to cover qualified medical expenses tax-free. Unused balances roll over from year to year.

Who Can Qualify?
Everyone (not just self-employed or small businesses) with a qualified high deductible insurance plan will be eligible for a tax-deductible HSA.

What is the difference between a Medical Savings Account 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 all size employers, the self-employed, individual, and families who are not self-employed)
	HSAs can be funded by the employer, employee or combination of the both within the same calendar year.
	HSAs are permanent and portable.
	Larger tax-deferred contributions to custodial accounts.
	There are broader deductible ranges.

What is a high deductible insurance plan?
For 2004, a high deductible insurance plan is a health plan with a minimum deductible of $1,000 for self-only coverage and $2,000 for family coverage. The maximum out-of-pocket expenses for allowed costs must be no more than $5,000 for self-only coverage and no more than $10,000 for family.

What will happen to Medical Savings Accounts effective January 1, 2004?
MSAs are scheduled to sunset (end) December 31, 2003. Existing MSAs may continue under the current rules. Effective January 1, 2004, those who would have qualified for an MSA will now qualify for an HSA.

Can a Medical Savings Account be rolled into a Health Savings Account?
Yes, MSAs can be rolled into HSAs on a tax-free basis, but it is not necessary. Those choosing not to roll their MSA to an HSA at this time will recieve information from their provider by the end of the first quarter of 2004 to facilitate a smooth migration from MSA to HSA.

Can MSA enforce business particpate in the new HSA program (i.e. expand the contribution amounts)? Yes, you can participate in the new HSA program as long as they complete the new HSA Adoption Agreement. If you choose to change the deductible coinsurance limits or contribution amounts, you do not have to do anything, except fillout an HSA Adoption Aggreement.

What are the new maximum contribution limits?
Annual contribution limits for 2004 are caped at either the high deductible plan deductible or $2,600 for individual or $5,150 for family - whichever amount is less.

What if I'm not sure I want an HSA? How can I handle that situation?
If at the time of sale, you beleive you may want an HSA account sometime in the future, but don't want to fund it right now, the best practice is to set up the account immediately. You don't need to fund the account right away. In this situation, we complete an HSA Adoption Agreement. If you send an HSA Adoption Agreement with the One Deductible Plan type, we will automatically note on our system that you have enrolled in the HSA ( this is required for our reporting to the IRS), regardless of what plan type is selected. If you send a One Deductible Plan type without an HSA Adoption Agreement, we will not a One Deductible Plan. If in the future you want to set up the HSA custodial account, you can complete the HSA Adoption Agreement at that time.