South Carolina Health Savings Account (HSA)

Who can purchase a South Carolina HSA?

Any South Carolina individual under the age of 65 who purchases a qualified South Carolina high-deductible policy can open an HSA. You may not be covered by another health insurance policy that isn't a qualified high-deductible plan (either as an individual or a dependent), although you can still have other disability, dental, vision and long-term care insurance policies.

How much can I contribute annually to a South Carolina HSA?

The revised rates of 2009 state, a South Carolina individual can contribute up to $3,000 and a family can contribute up to $5,950 for. If you are 55 or older you have the ability to contribute an extra $1,000 per year and all the years going forward. This is called the "Catch Up Contribution".

Can any South Carolina high-deductible health insurance policy qualify for an HSA?

Any South Carolina high-deductible health insurance policy can qualify, as long as it meets the IRS requirements. As of 2009, the deductible minimum must be $1,150 for individuals or $2,300 for families, and the maximum annual out-of-pocket expenses cannot exceed $5,800 for an individual or $11,600 for a family, including the deductible and co-payments (but not premiums). South Carolina Individuals can buy high-deductible policies on their own or through their employers.

How and where can I open a South Carolina health savings account?

It depends on if you're buying coverage on your own or getting it through your employer.

On your own. You can find a list of South Carolina health insurance companies offering HSA-eligible plans by clicking here to start your quote. You can compare several companies in South Carolina through our quoting software or feel free to contact us anytime. The list of companies offering HSA-eligible plans continues to grow every month.

Through your employer. If you get health insurance through your employer, you may have seen an HSA-eligible option during last-year's open-enrollment period. If not, talk to your benefits manager to see if HSAs will be on your health insurance menu. Choosing an HSA could knock down your share of premiums significantly, and some employers may choose to fund all or part of the HSA for you -- perhaps even adding a 401(k)-style match.

Do I fund a South Carolina HSA with pre- or post-tax dollars?

If your employer offers a high-deductible health insurance policy, you may be able to make pretax contributions. If you open the South Carolina HSA on your own, your contributions will be deductible when you file your taxes, even if you don't itemize.

Do the tax benefits phase out at certain income levels?

Unlike many other tax breaks, there are no income limits. Any South Carolina resident under the age of 65 who buys a qualified South Carolina high-deductible health policy can open an HSA.

If I set up South Carolina HSA through my employer, what happens if I switch jobs?

You can keep the money in a South Carolina HSA account even after you leave that job, similar to a 401(k). But you will get stuck with a 10% penalty, plus an income-tax bill if you use any of the money for nonmedical expenses before the age of 65.

What happens if I want to withdraw the money for nonmedical expenses after age 65?

You won't be hit with the 10% penalty if you use the money for nonmedical expenses after age 65, but you would still have to pay income taxes on the money. Keep in mind that you can continue to withdraw money from the account tax-free for qualified medical expenses after the age of 65.

Can a couple who is planning to retire early open an HSA?

Absolutely. Any South Carolina resident under the age of 65 can contribute to an HSA if he or she buys a South Carolina high-deductible health insurance policy. You can also contribute an extra $1,000 in 2009 if you're 55 or older.

You can't make new HSA contributions after age 65, but you can still use the money in your account tax-free for medical expenses at any age. You'll owe income taxes on the money but no penalty if you withdraw the money for nonmedical expenses after age 65.

Do contributions to a South Carolina HSA in any way affect one's ability to contribute to an individual retirement account?

No. Your South Carolina HSA contributions won't affect your IRA limits -- $5,000 per year or $6,000 for those over 50. It's just another tax-deferred way to save for retirement.