Page 19 - Allied_Plan Doc SPD 0101214

Your Health Savings Account (“HSA”)

Your medical coverage enables you to establish an HSA. In order to participate in the HSA, you
will need to open an account at an approved financial institution that will be used to pay for
current and future health care expenses. This account can be funded by both Employer and
your own contributions.

How the HSA Works
An HSA works in conjunction with a high-deductible health plan (“HDHP”). Basically, it consists
of 2 parts:

 the HDHP, as defined by the IRS that covers eligible health care expenses after you
meet your deductible.

 a savings account to which both you and the Employer can contribute. As your savings
accumulate (on a tax-free basis), you have the opportunity to direct how your money is
invested.
The HSA is not a part of the HDHP and is not sponsored by your Employer. The information in
this section is provided only as an overview of the HSA benefit.
Your employer may, or may not, contribute an annual amount (as shown in your enrollment
materials) to your HSA. If so, this amount may be a flat dollar amount payable to all participants
or it may be based on the coverage you select (i.e., individual or family). The amount your
Employer deposits into your account, if any, is not taxable for Federal tax purposes; however, it
may be taxable for state purposes, depending on your state of residence.
After you open your account, you can make contributions to your HSA by personal check. These
contributions may be deducted on your Federal income tax return, using IRS Form 1040 and
Form 8889. You can contribute up to the maximum annual contribution limit permitted by law,
but certain rules apply to future years if your initial year of participation is a partial year. The
annual maximum amount (a combination of your Employer’s contribution and yours) is set each
year by the IRS. For example, the maximum contribution limit for an individual with family HDHP
coverage increased by $200 to $6,450 in 2013. The IRS also determines the minimum annual
deductible amount for an HDHP, as well as the limits for out-of-pocket maximum amounts. You
may wish to discuss your individual tax situation with your tax advisor or obtain IRS Publication
969 - Health Savings Accounts and Other Tax-Favored Health Plans, available at the IRS
website below.
Funds must be deposited into your HSA before eligible expenses can be reimbursed. You can
use funds in your account to pay for current and future qualified health care expenses. These
include medical and prescription drug expenses, as well as deductible and coinsurance
amounts, for yourself and your eligible dependents. A complete list of qualified medical
expenses may be found in IRS Publication 502, available at www.medicare.gov or www.irs.gov.
In addition, you can use these funds for other qualified expenses, such as dental, vision, and
alternative medicine expenses, and for certain non-health care expenses. However, if you use
the money in your account for non-health care expenses, the amount is subject to ordinary
income tax, plus a tax penalty if you are under age 65. The tax penalty generally does not apply

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