Health Saving Accounts (HSAs)

Health Savings Accounts (HSAs) are available to employees covered by a high deductible health plan (HDHP).  HSAs can be established to pay for family medical expenses.

HDHP for 2008:

     •  Single Coverage

           •  Minimum $1,100 deductible

           •  Maximum out-of-pocket expense not to exceed $5,500

     •  Family Coverage

           •   Minimum $2,200 deductible

           •   Maximum out-of-pocket expense not to exceed $11,000

HSA Elgibility, any individual that:

•  is covered under a HDHP
•  is not covered by any other impermissible insurance
•  is not receiving Medicare
•  is not claimed as a dependent on someone else's tax return

About HSAs:

     •  If the HSA if offered through a cafeteria plan in the workplace, employees save on           Federal and State Income Tax, along with FICA and Medicare taxes (approximately           30%)

      •  If the HSA if offered through a cafeteria plan in the workplace, employers save           on FICA and Medicare taxes (7.65%)

      •  Employers and employees can make contributions

      •  Owned by the employee

      •  HSAs grow through investments, similar to an IRA

      •  Favorable tax treatment for contributions, distributions and earnings

      •  Unspent balances remain in the account and rollover to the following year

      •  Contribution levels for 2008 are $2,900 for single coverage or $5,800 for family

          coverage

      •   If the individual is age 55 or older, a catch-up contribution of $900 is allowed in 2008

      •   Encourages saving for future medical expenses

      •  IRS non-discrimination rules do not apply

For more information regarding HSAs, go to: www.thebancorphsa.com

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