The handlebars should be at the same level or slightly higher than your seat. If you have back issues, you may want to position the handlebars a little bit higher.
To adjust handlebar height, Unscrew the T-handle until the pin is loose, and pull the handle/pin outward to disengage the handlebar post. Adjust by keeping the handle/pin pulled out with one hand, while moving the handlebar post up or down with the other. When its in position, release tension on the handle/pin, and move the handlebars slightly until the pin clicks in. Then turn clockwise to tighten.