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HEALTH SAVINGS ACCOUNTS

HEALTH SAVINGS ACCOUNTS. PUB 969 FORMS 1099-SA & 8889. HEALTH SAVINGS ACCTS . OBJECTIVES INTRODUCTION TO HSA REVIEW QUALIFICATIONS CONTRIBUTIONS DISTRIBUTIONS REPORTING REQUIREMENTS. TAX FAVORED HEALTH PLANS. MSA – MEDICAL SAVINGS ACCOUNTS ARCHER MSA MEDICARE ADVANTAGE MSA

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HEALTH SAVINGS ACCOUNTS

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  1. HEALTH SAVINGS ACCOUNTS PUB 969 FORMS 1099-SA & 8889 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  2. HEALTH SAVINGS ACCTS • OBJECTIVES • INTRODUCTION TO HSA • REVIEW QUALIFICATIONS • CONTRIBUTIONS • DISTRIBUTIONS • REPORTING REQUIREMENTS NY3 INSTRUCTOR WORKSHOP NOV. 2010

  3. TAX FAVORED HEALTH PLANS • MSA – MEDICAL SAVINGS ACCOUNTS • ARCHER MSA • MEDICARE ADVANTAGE MSA • FSA – FLEXIBLE SPENDING ARRANGEMENT • HRA – HEALTH REIMBURSEMENT ARRANGEMENT • HSA- HEALTH SAVINGS ACCOUNTS NY3 INSTRUCTOR WORKSHOP NOV. 2010

  4. HSA INTRODUCTION • TRUST OR CUSTODIAN ACCOUNT TO PAY FOR MEDICAL EXPENSES • BANK OR INSURANCE CO • IRA OR ARCHER MSA CUSTODIAN • CONTRIBUTIONS • INDIVIDUAL or EMPLOYER or OTHERS • DISTRIBUTIONS TAX-FREE • QUALIFIED MED EXPENSES NY3 INSTRUCTOR WORKSHOP NOV. 2010

  5. HSA INTRODUCTION • BENEFITS • TAXPAYER CONTRIBUTIONS DEDUCTIBLE • EMPLOYER CONTRIBUTIONS EXCLUDED FROM INCOME • EARNINGS ACCUMULATE TAX-FREE • DISTRIBUTIONS TAX-FREE IF USED TO PAY FOR QUALIFIED MEDICAL EXPENSES • PORTABLE JOB-TO-JOB NY3 INSTRUCTOR WORKSHOP NOV. 2010

  6. HSA QUALIFICATIONS • MUST HAVE HIGH-DEDUCTIBLE HEALTH PLAN (HDHP) • SINGLE $1200 FAMILY $2400 • MAX OUT OF POCKET • SINGLE $5950 • FAMILY $11900 • NOT ENROLLED IN MEDICARE • NOT CLAIMED AS DEPENDENT ON SOMEONE ELSE’S RETURN NY3 INSTRUCTOR WORKSHOP NOV. 2010

  7. HSA QUALIFICATIONS • CAUTION • FAMILY COVERAGE PLAN • FAMILY DEDUCTIBLE = $3500 • INDIVIDUAL DEDUCTIBLE = $1500 • PLAN DOES NOT QUALIFY • INDIVIDUAL DEDUCTIBLE LOWER THAN MINIMUM FOR FAMILY PLAN • EXCEPTION • HDHP CAN COVER PREVENTIVE CARE WITHOUT DEDUCTIBLE OR LOW DEDUCTIBLE NY3 INSTRUCTOR WORKSHOP NOV. 2010

  8. HSA QUALIFICATIONS • NO NON HDHP HEALTH COVERAGE EXCEPT: • LIABILITIES INCURRED UNDER WORKMAN’S COMPENSATION • TORT LIABILITIES • SPECIFIC DISEASE OR ILLNESS • FIXED AMOUNT PER DAY OF HOSPITALIZATION • SPOUSE CAN HAVE NON-HDHP IF TAXPAYER NOT COVERED NY3 INSTRUCTOR WORKSHOP NOV. 2010

  9. HSA QUALIFICATIONS • GENERALLY, CANNOT PARTICIPATE IN FSA OR HRA • OTHER ALLOWED COVERAGE • ACCIDENT • DISABILITY • DENTAL • VISION • LONG TERM CARE NY3 INSTRUCTOR WORKSHOP NOV. 2010

  10. HSA CONTRIBUTIONS • CONTRIBUTIONS MUST BE CASH • LIMITS • SELF ONLY: $3050/YEAR • FAMILY: $6150/YEAR • CONTRIBUTIONS ACCEPTED UNTIL 4/15 OF FOLLOWING YEAR • EXCESS CONTRIBUTIONS MUST BE WITHDRAWN (SIM TO IRA) • WITHDRAWALS NOT MADE? (OUT-OF-SCOPE) • AGE 55 OR OVER: ADDL $1,000/YR UNTIL ENROLLED IN MEDICARE NY3 INSTRUCTOR WORKSHOP NOV. 2010

  11. HSA CONTRIBUTIONS • EMPLOYEE HSA – CONTRIBUTORS • EMPLOYEE • EMPLOYER • W-2, BOX 12, CODE W • FAMILY MEMBER OR OTHER PERSON • ALL THE ABOVE • SELF-EMPLOYED - CONTRIBUTORS • INDIVIDUAL • FAMILY MEMBER OR OTHER PERSON • ALL THE ABOVE NY3 INSTRUCTOR WORKSHOP NOV. 2010

  12. HSA CONTRIBUTIONS REF ONLY: OUT-OF-SCOPE THIS YEAR • QUALIFIED FUNDING DISTRIBUTION • FROM TRADITIONAL OR ROTH IRA • NO SPECIAL REPORTING MECHANISM • USUALLY DIRECT TRANSFER • NOT SEP/SIMPLE IRA • NOT INCLUDED IN INCOME • REDUCES CONTRIBUTION LIMIT • MUST STAY ENROLLED FOR 1 YEAR • ONCE PER LIFETIME • ROLLOVER FROM ARCHER MSA OR ANOTHER HSA • DOES NOT REDUCE CONTRIBUTION LIMIT • FUNDS TRANSFERRED WITHIN 60 DAYS • NOT INCLUDED IN INCOME – NOT DEDUCTIBLE • MUST STAY ENROLLED FOR 1 YEAR • ONCE PER YEAR NY3 INSTRUCTOR WORKSHOP NOV. 2010

  13. HSA CONTRIBUTIONS • LIMIT DETERMINED BY STATUS AS OF DECEMBER 1. • OWNERSHIP, TYPE OF HSA • AGE DEFINED BY AGE AS OF DEC 31st • EXCESS CONTRIBUTIONS CAN BE WITHDRAWN • TEST PERIOD • 12 MONTHS AFTER CHANGE • 12 MONTHS AFTER FUNDING • IF ELIGIBILITY NOT MAINTAINED, CONTRIBUTION BECOMES TAXABLE & SUBJECT TO 10% PENALTY NY3 INSTRUCTOR WORKSHOP NOV. 2010

  14. HSA DISTRIBUTIONS • REPORTED ON 1099-SA • PAY FOR QUALIFIED MEDICAL EXPENSES • INCURRED BY SELF, SPOUSE AND DEPENDENTS • MEDICAL AND DENTAL EXPENSES ALLOWED FOR SCHEDULE A DEDUCTION • NON PRESCRIPTION MEDS QUALIFY NY3 INSTRUCTOR WORKSHOP NOV. 2010

  15. FORM 1099-SA NY3 INSTRUCTOR WORKSHOP NOV. 2010

  16. 1099-SA DISTRIBUTION CODES • 1 – NORMAL DISTRIBUTION • 2 – EXCESS CONTRIBUTIONS • 3 – DISABILITY • 4 – DEATH, OTHER THAN CODE 6 • 5 - PROHIBITED TRANSACTION • 6 – DEATH DISTRIBUTION AFTER YEAR OF DEATH TO NONSPOUSAL BENEFICIARY NY3 INSTRUCTOR WORKSHOP NOV. 2010

  17. HSA DISTRIBUTION • QUALIFIED EXPENSES DO NOT INCLUDE: • PREMIUMS FOR HEALTH INSURANCE • INCLUDED ARE PREMIUMS FOR: • LONG TERM CARE • COBRA • INSURANCE WHILE UNEMPLOYED • CANNOT DEDUCT HSA EXPENSES ON SCHED A NY3 INSTRUCTOR WORKSHOP NOV. 2010

  18. HSA DISTRIBUTIONS • EXCESS DISTRIBUTIONS • TAXABLE • SUBJECT TO 10% PENALTY UNLESS: • DEATH (OUT OF SCOPE) • DISABILITY • TURNS AGE 65 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  19. HSA REPORTING • BALANCE CAN BE CARRIED OVER TO NEXT YEAR • MUST FILE FORM 8889 IF ANY ACTIVITY DURING YEAR. • TAXPAYER SHOULD PROVIDE FORM 1099-SA NY3 INSTRUCTOR WORKSHOP NOV. 2010

  20. FORM 8889 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  21. FORM 8889 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  22. FORM 8889 pg 2REF ONLY: OUT-OF-SCOPE NY3 INSTRUCTOR WORKSHOP NOV. 2010

  23. LETS LOOK AT THE RETURN • RAYMOND ROGERS • AGE 57, SINGLE • EMPLOYED • EMPLOYER CONTRIBUTES $2000 • MR. ROGERS CONTRIBUTES $2000 • MR. ROGERS HAS A 1099-SA FOR $3750 • MED EXPENSES ARE $3825 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  24. Mr ROGERS W-2 45,000.00 47,000.00 ABC CORP 47,000.00 W $2,000.00 RAYMOND ROGERS NY3 INSTRUCTOR WORKSHOP NOV. 2010

  25. Mr ROGERS FORM 1099-SA $3,750 1 RAYMOND ROGERS x NY3 INSTRUCTOR WORKSHOP NOV. 2010

  26. Mr. ROGERS FORM 8889 RAYMOND ROGERS x $2,000 $4,000 $4,000 $4,000 $4,000 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  27. Mr. ROGERS FORM 8889 $2,000 $2,000 $2,000 $2,000 $3,750 $3,750 $3,825 0 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  28. Mr ROGERS FORM 1040, pg 1 $2,000.00 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  29. LETS LOOK AT THE RETURN • JAMES AND MARGIE SMITH • HAVE FAMILY HDHP – • ONLY JAMES IS EMPLOYED • BOTH OVER 55 • JAMES CONTRIBUTED $4800 • EMPLOYER CONTRIBUTED $1200 • RECD DISTRIBUTION OF $1875 • QUALIFIED EXPENSES WERE $1935 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  30. Mr SMITH’S W-2 $66,700.00 $67,900.00 $67,900.00 W $1200.00 JAMES SMITH NY3 INSTRUCTOR WORKSHOP NOV. 2010

  31. Mr SMITH’S 1099-SA $1875.00 1 x NY3 INSTRUCTOR WORKSHOP NOV. 2010

  32. Mr. SMITH’S FORM 8889 x $4.800.00 $5,950.00 $5,950.00 $5,950.00 $1,000.00 $6,950.00 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  33. Mr. SMITH’S FORM 8889 $1,200.00 $1,200.00 $5,750.00 $4.800.00 $1,875.00 $1,875.00 $1,935.00 0 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  34. Mr. SMITH’S FORM 1040, Pg 1 $4.800.00 NY3 INSTRUCTOR WORKSHOP NOV. 2010

  35. HEALTH SAVINGS ACCTS QUESTIONS??? COMMENTS!! NY3 INSTRUCTOR WORKSHOP NOV. 2010

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