Pub. 5 2015-2016 Issue 3

12 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S T he popular ity of health sav ings ac- count s (HSAs) cont i nues to g row w i t h no s i gn s of s l ow i ng down . With healthcare costs continuing to rise, employers and individuals are turning to high deductible health plans (HDHPs) instead of tra- ditional preferred provider organization (PPO) health plans to help offset insurance costs. Qualifying HDHPs and HSAs can be paired together to get the full benefit of the HDHP/ HSA combination. Individuals can take what they save from paying lower health insurance premiums and contribute that amount to their HSAs to save and pay for qualified medical ex- penses. Unfortunately, many of those covered by HDHPs are not taking advantage of the HSA opportunity. EducatingHDHP clients about the opportunities and benefits of having an HSA may help your financial organization grow its HSA business. HSA Eligibility To better educate clients who are HSA-el- igible or to discuss the HSA opportunity with them, your staff must understand the four requirements that satisfy HSA eligibility. An individual • must be covered by an HDHP, • must not be covered by any other health insurance plan that is not an HDHP, • cannot be enrolled in Medicare, and • cannot be eligible to be claimed as a depen- dent on anyone’s tax return. HDHP Coverage One of the first things to ask a potential HSA owner is if he is covered under an HDHP. A health plan generally is an HSA-eligible HDHP if the plan satisfies both a minimum annual de- ductible and amaximumout-of-pocket expense requirement. There are two types of coverage under the plan: self-only and family. If the health plan has a deductible that is lower than the listed amounts for each type of coverage or an out-of-pocket cap that is higher than these amounts, the plan is not HSA-eligible. Other Coverage If an individual is covered under anHSA-el- igible HDHP, he generally cannot be covered by another insurance plan that is not an HDHP. For example, an individual who is covered by both an HDHP and by a prescription drug plan is not an eligible individual unless the prescrip- tion drug plan also is anHDHP. There are some exceptions to this rule. For example, an indi- vidual can still remain HSA-eligible if covered by accident, disability, dental care, vision care, long-term care, or other permitted insurance. Enrollment in Medicare The third requirement is a bit tricky. Federal law states that an individual who is “entitled to benefits under”Medicare becomes ineligible for an HSA starting with the month she is entitled toMedicare benefits. But the IRS has since clar- ified that as long as an individual is not enrolled in any portion of Medicare—Part A, B, D, or any other part—the individual is still HSA-eligible. Dependent on Another’s Tax Return The final requirement for HSA eligibility is not as clear as it may seem. Not only can an individual not be claimed as a dependent on another person’s tax return, but an individual cannot be eligible to be claimed as a dependent on another person’s tax return. FEATURE ARTICLE If not eligible to be claimed as dependents, such individuals could meet the eligibility requirements for their own HSAs. TRISH REILLY COPY WRITER ASCENSUS HSA Eligibility: The Untapped Market