Undiscovered Managers Fund


Posted by Admin

Undiscovered Managers Fund

Undiscovered Managers Fund

The two articles entitled Qualifying for a Health Savings Account Can Save Money and How Can a Health Savings Account Reduce Medical Costs and Taxes? addressed the following questions:

  • What is a health savings account (HSA)?
  • Who qualifies to set up an HSA?
  • What are the features of an HSA?
  • What are the features of a high-deductible health plan (HDHP)?
  • How can an HSA reduce medical costs and taxes?

The article HSAs Can Reduce Medical Costs and Taxes – A Practical Example examined some possible scenarios in which an HSA can help save medical costs and taxes. But how should the funds in an HSA be handled in order to receive favorable tax treatment?

Getting Started With a Health Savings Account

According to IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, an HSA must be set up with a trustee. A qualified HSA trustee may be a bank, an insurance company, or anyone approved by the IRS. In some cases, the trustee may be provided through the health insurance company, but in other cases the policy holder must set up the account with the trustee himself.

Once the individual is enrolled in the HSA, the trustee will usually provide three items:

  • A checkbook
  • A debit card
  • Deposit slips

If a medical services provider accepts the debit card, then the card can be used to pay for the services. However, the individual must remember that it is a debit card, not a credit card. If the funds are not available in the HSA, then the payment will be rejected.

If the provider doesn’t accept debit cards, then the individual may be able to write a check for the services. If the service provider will not accept either form of payment, or there are insufficient funds in the HSA at the time the service is provided, the policyholder must pay the bill by some other means, and then he can reimburse himself by writing a check when there are sufficient funds in the account. The trustee will probably charge the account for any check written when there are insufficient funds to cover the check.

Contributions to a Health Savings Account

If the individual’s HSA is through a health insurance plan provided by an employer, both the employer and the employee may contribute to the HSA. Employee contributions are usually made through payroll deductions. The employer forwards both the employer and the employee contributions to the HSA.