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.

The following provisions in the President’s tax relief signed into law from 2001-2005 are scheduled to expire at the end of 2010:

* Creation of the new 10 percent individual income tax bracket.
* Reduction in individual income tax rates above 15 percent rate bracket.
* Reduction of marriage penalties in the standard deduction, 15 percent rate bracket, and the earned income tax credit.
* Lowering the tax rate on capital gains and dividend income to 15 percent (0 percent for the lowest two rate brackets).
* Increase in the child tax credit to $1,000.
* Expansion of the partially refundable additional child tax credit.
* Increase in the child and dependent care tax credit.
* Simplification of the rules for determining income for the earned income tax credit.

According to a Fact Sheet from the Department of the Treasury, millions of Americans will see their taxes go up by billions in 2011 if these measures are not made permanent. Here are some of the figures cited by the Treasury Department:

* More than 5 million low-income individuals and couples will no longer be exempt from individual income tax.

* 115 million taxpayers will see a $1,716 increase;
* 84 million women – $1,970 increase;
* 48 million married couples – $2,726 increase;
* 42 million families with children – $2,084 increase;
* 12 million single women with children– $1,062 increase;
* 17 million seniors – $2,034 increase;
* 26 million small business owners – $3,637 increase.

The Treasury Department predicts that a family of four with two children earning $56,300 (projected increase in income from $50,000 in 2006) will see a 132% increase in their taxes in 2011.

According to a statement released by the US Department of the Treasury, the economy is in a position to maintain moderate growth for the rest of 2006 based on economic indicators in the second quarter.

In his “Statement for The Treasury Borrowing Advisory Committee of The Bond Market Association” (don’t try to say it three times fast) released on July 31,2006, Robert Stein, the Deputy Assistant for Macroeconomics states that the GDP (Gross Domestic Product) grew 3.5 percent despite some ups and downs. Unemployment was at 4.6%, the lowest quarterly rate since 2001 and over 1.8 million jobs have been added since last year.

Core inflation was at 2.6% but consumer prices were 4.3% over last June. Gasoline prices were up more than 33 percent with consumers looking at prices of more than $3 per gallon for gasoline. Energy prices are being blamed for the rise in inflation in the second quarter.

Despite a slowing since the robust 5.6% growth of the first quarter, the economy is expected to maintain an overall 3% growth for the rest of the year.