Health Savings Accounts
A Health Savings Account or HSA is an account to which you contribute tax-free money for the payment of future medical expenses. When you pay medical expenses with the money, the withdrawals are tax-free as well. If you invest the money in your account, the earnings are also tax-free, giving you triple tax savings.
Who can have an HSA?
Any adult can contribute to an HSA if they:
• Have coverage under an HSA-qualified “high
deductible health plan†(HDHP)
• Have no other first-dollar medical coverage (other
types of insurance like specific injury insurance or
accident, disability, dental care, vision care, or longterm
care insurance are permitted).
• Are not enrolled in Medicare.
• Cannot be claimed as a dependent on someone else’s tax return.
A high deductible health plan is defined as one that has at least a $1,050 deductible for self coverage or $2,100 for a family plan. By enrolling in such a plan you also save on premiums. The deductible must apply to all medical expenses except prevantative care. The annual limit for contributions to your HSA is the amount of your deductible or $2,700, whichever is higher.
For more information on HSA’s and how they work, visit the Treasury Department’s website.
Someday perhaps I will get that…have to get a better job but it sounds like a good idea
By Janus on September 15th, 2006 at 9:06 pm
Some employers offer these health care spending accounts as well, without the deductible requirement. However, often with a health care savings account through your employer, you cannot rollover amounts you did not spend and so careful planning is necessary when calculating how much to contribute or you could lose money. The contributions will be deducted pre-tax though, which does save you some money on your income tax by lowering your taxable income.
By Andrea on September 16th, 2006 at 8:27 pm