HSAs were created by Congress through the Medicare, Prescription Drug, Improvement, and Modernization Act of 2003 and became effective on January 1, 2004. They were created in response to the rising cost of health care and health insurance and the larger number of individuals and families with high deductible health plans. The intent of Congress in passing the Health Savings Account (HSA) legislation was to provide financial incentive to employers of all sizes to provide health insurance and put health care decisions back in the hands of consumers.

• Health Savings Account (HSA) are accounts insured by the NCUA up to $250,000 until December 31, 2013 after that $100,000 (collectively for all savings products excluding IRAs)
• HSA contributions can be made by payroll deduction, share transfer, or check
• Eligible contributions are fully tax deductible
• Qualified Distributions are tax-free and penalty-free
• Rollovers and direct transfers can be made from one HSA to another HSA or from a Medical Savings Account to an HSA
• No required minimum distributions
• Earns a high-yield dividend rate
• Combined quarterly statement

What is a Health Savings Account (HSA)?
They are similar to IRAs in that contributions are tax deductible, earnings are tax deferred, and qualified distributions are tax-free and penalty-free. The account is also portable (you can retain the account after he/she changes employment or health insurance plans). Additionally, there is “no use it or lose it” provision as with Section 125 plans. HSAs are not, however, designed as long-term savings accounts.

You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not a high deductible health plan (HDHP). However, you can have additional insurance that provides benefits only for the following items:

• Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property.
  • A specific disease or illness.
  • A fixed amount per day (or other period) of hospitalization.
  • Your funds will be automatically deposited into your Share Savings Account unless you instruct otherwise.
• You can also have coverage (whether provided through insurance or otherwise) for the following items:
  • Accidents
  • Disability
  • Dental care
  • Vision care
  • Long-term care

The main requirement is that the individual must be covered under a qualified HDHP. The plan must meet both the requirements listed in the chart below:

Health Savings Account Brochure