A Health Savings Account (HSA) is a federally tax-deductible and tax free medical savings account.  It was created in response to the rising costs of health care with the intent to allow the individual to be in control of their health care costs.  Unlike flexible spending accounts there is no “use or lose it” rules and the funds can rollover year after year if not used.  The HSA is used in conjunction with a high-deductible health insurance plan.

The primary eligibility is individuals who are enrolled in a High Deductible Health Plan.

A high deductible health insurance plan is an inexpensive plan that generally doesn't pay for the first several thousand dollars of health care expenses (i.e., your "deductible") but will generally cover you after that. Minimum deductible Individual $1,100 Family $2,200

You should consider opening a HSA because it may save you money in the short and long term by allowing you to deduct 100% of your HSA contribution from your taxable income and by paying no penalties or taxes when you sue your HSA to pay for qualified medical expenses.

The maximum yearly contribution for tax year 2008 are as follows :
For individuals it is $2,850.00 and for families it is $5,650.00.
Note: If you are between the ages of 55 and 65, you can make an additional annual "catch up" contribution (of up to $800 in 2007.)

• You will be provided with a checkbook and you can use the checks to pay for qualified medical expenses.
• You do not need approval from the credit union to use the funds in the account.
• You also do not need to submit receipts to the credit union after you use funds for a qualified medical expense.  You should however save the receipts, as you would keep receipts for other items that are deducted from your taxes.

There are many types of medical expenses that can be paid for by using your HSA:

• Health insurance plan deductibles, co-payments, and coinsurance
• Prescription and over-the-counter drugs
• Dental services, including braces, bridges, and crowns
• Vision care, including glasses and lasik eye surgery
• Psychiatric and certain psychological treatments
• Long-term care services
• Medically-related transportation and lodging

Typically HSAs cannot be used to pay health insurance premiums, although there are exceptions for:

• Health insurance premiums if you are receiving federal or state unemployment benefits
• Premiums for COBRA qualified health insurance
• Certain qualified long-term care insurance premiums
• Premiums for a health plan (other than a Medicare supplemental policy) for an individual age 65 or older

Note: You must establish an HSA before incurring any expenses or the expenses will not qualify.