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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Summer 2004

New Tax-Advantaged Savings Account for Medical Costs

You should expect to hear more about a new Health Savings Account (HSA) that, for some consumers, could mean big tax breaks when used to save for certain medical costs, including doctor fees and long-term care insurance payments. But not everyone is eligible to open an HSA. Here's a quick summary.

You can set up an HSA at a bank or other U.S. financial institution that offers these accounts. According to IRS rules, your contributions are tax deductible and contributions made by your employer may be excluded from your gross income. The money can remain in the account for years and your earnings grow tax free. Also, there is no tax on the money you withdraw to pay for qualified medical expenses.
In general, to open an HSA you must be under age 65 and have a qualified health insurance plan that has a deductible (i.e., amount you pay) of at least $1,000 (or $2,000 for a family policy). Contributions to HSAs are limited to the amount of your annual deductible. For more information, read IRS Bulletin No. 2004-2 online at www.irs.gov/irb/2004-02_IRB/ar09.html, contact your local IRS office or consult your tax advisor.

How does the FDIC insure these accounts? In general, an HSA deposit account at an insured institution would be protected for up to $100,000 along with any deposits you hold in your name at the same institution – but there are exceptions. To learn more, call or write the FDIC.

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Last Updated 08/26/2004 communications@fdic.gov