Health Medical Symptoms & Diagnosis Guides

A Health Savings Account (HSA) is an account that you can put money into to save for future medical expenses. There are certain advantages to putting
money into these accounts, including favorable tax treatment. HSAs were signed into law by President Bush on December 8, 2003.

Who Can Have an HSA

Any adult can contribute to an HSA if they:

• Have coverage under an HSA-qualified “high eductible health plan” (HDHP)
• Have no other first-dollar medical coverage (other ypes of insurance like specific injury insurance or ccident, disability, dental care, vision care, or longterm are insurance are permitted).
• Are not enrolled in Medicare.
• Cannot be claimed as a dependent on someone else’s tax return

Contributions to your HSA can be made by you, your employer, or both. However, the total contributions are limited annually. If you make a contribution, you can deduct the contributions (even if you do not itemize deductions) when completing your federal income tax return.

Contributions to the account must stop once you are enrolled in Medicare. However, you can keep the money in your account and use it pay for medical expenses tax-free.

Advantages of HSAs

Security – Your high deductible insurance and HSA protect you against high or unexpected medical bills.

Affordability – You should be able to lower your health insurance premiums by switching to health insurance coverage with a higher deductible.

Flexibility – You can use the funds in your account to pay for current medical expenses, including expenses that your insurance may not cover, or save the money in your account for future needs, such as:

• Health insurance or medical expenses if unemployed
• Medical expenses after retirement (before Medicare)
• Out-of-pocket expenses when covered by Medicare
• Long-term care expenses and insurance

Savings – You can save the money in your account for future medical expenses and grow your account through investment earnings.

Control – You make all the decisions about:

• How much money to put into the account
• Whether to save the account for future expenses or pay current medical expenses
• Which medical expenses to pay from the account
• Which company will hold the account
• Whether to invest any of the money in the account
• Which investments to make

Portability – Accounts are completely portable, meaning you can keep your HSA even if you:

• Change jobs
• Change your medical coverage
• Become unemployed
• Move to another state
• Change your marital status

Ownership – Funds remain in the account from year to ear, just like an IRA. There are no “use it or lose it” rules for HSAs.

Tax Savings – An HSA provides you triple tax savings:

1. tax deductions when you contribute to your account;
2. tax-free earnings through investment; and,
3. tax-free withdrawals for qualified medical expenses.

What Happens to My HSA When I Die?

If you are married, your spouse becomes the owner of the account and can use it as if it were their own HSA. If you are not married, the account will no longer be treated as an HSA upon your death. The account will pass to your beneficiary or become part of your estate (and be subject to any applicable taxes).

Opening Your Health Savings Account

Banks, credit unions, insurance companies and other financial institutions are permitted to be trustees or custodians of these accounts. Other financial institutions that handle IRAs or Archer MSAs are also automatically qualified to establish HSAs. If you cannot locate a local institution willing to establish your account, check links under “Resources” on the Treasury website.

Need More Information about HSAs? Treasury’s HSA website can be found through www.treas.gov (click on “Health Savings Accounts”)

Related posts

• What is Differences Between HSAs and Health Insurance ? (0)
• Interest in Health Savings Accounts in 2008 (0)
• Finding Health Savings Accounts Guides (0)
• Indemnity Health Insurance Plans Guides (0)
• Health Savings Account Write-offs - Be Sure to Take Them All (0)