Blogger BlogNet89464

Health Savings Accounts (HSAs) Benefit Some Health Plan Shoppers

Published Monday, August 18, 2008 by bloggerblognet22596 | E-mail this post

Health Savings Accounts are Not For Everybody

If you are not a good saver, you may be better off by choosing a more traditional type of health plan with a lower deductibles and office copays. However, if you can discipline yourself to save, you will find lots of advantages when you use a health savings account and high deductible health insurance plan.

How does an HSA work?

An HSA works in conjunction with a high deductible health plan to give you health insurance coverage at a generally reduced net cost. All the money you deposit into an HSA under the annual contribution limit is 100 percent tax-deductible. You pay expenses with tax-advantaged money from the HSA until you meet your deductible, and your health care coverage pays covered expenses in excess of the deductible amount. You can even use your tax advantaged HSA dollars to pay for medical expenses not covered under your health plan, such as dental, vision and alternative medical expenses. Unlike a flexible spending account, unused HSA contributions roll over from year to year and accumulate to be used for future health care expenses.

Health Savings Account (HSA) Plans

A Health Savings Account is a special tax-sheltered savings account designated for medical expenses. An HSA allows you to pay for current qualified health expenses and save for future qualified medical and retiree health care expenses on a tax-free basis. Contributions and earnings are exempt from federal and most state income taxes, as well as Social Security (FICA) taxes. These tax savings also apply to all distributions when used to pay for qualified medical expenses. To be eligible for an HSA, you must be covered by a high deductible health plan, but cannot be:

Covered by any medical plan other than a covered by any other health plan except for a high deductible health plan. However, dental and vision plans are not included in this restriction);

Enrolled in Medicare; or
Claimed as a dependent on another individual's tax return.

Tax-advantaged: Neither contributions, earnings nor withdrawals (for qualified medical expenses) are taxed.

Flexible: Money accumulates and remains with you (is non-forfeitable). The funds in the account can be used for non-medical expenses, but are then subject to ordinary tax plus a 10 percent penalty if you are under age 65. (However, this 10 percent penalty does not apply if the distribution occurs after disability or death.)

Portable: Accounts move with you if you change employers or retire.

A savings mechanism for future health needs: Unused contributions accumulate and can be "banked" for future medical expenses

Compare High Deductible Health Plans and Traditional Health Insurance with a fast, safe, and free health insurance quote at http://www.247QuoteUS.com

FRS Healthy Energy
Lance Armstrong FRS Energy
Quercetin FRS Energy
FRS Antioxidant Drink

0 Responses to “Health Savings Accounts (HSAs) Benefit Some Health Plan Shoppers”