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About
Health Savings Accounts
By
Fred
Adams
Vice President- HSA
for America
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A Health
Savings Account (HSA) is a tax-exempt trust or custodial
account that offers individuals and families a tax-free way
to pay for current health care expenses and save for future
qualified medical and retiree health expenses. You may
use any remaining account balances to supplement your retirement
income.
HSAs were
created to go hand-in-hand with a qualified high-deductible
health insurance plan so that individuals and families
can pay less in insurance premiums and put the savings (along
with additional funds) in a tax-exempt HSA.
First,
you must have a high-deductible health insurance policy that
qualifies to be partnered with an HSA. These plans are
available through various insurance companies, depending upon
what part of the country you live. The plans are all similar
in the fact that they have deductibles ranging between $1,050
and $5,200 per year for individuals, and between $2,100
and $10,500 for families.
Once the
insurance policy has become effective, you may fund an HSA
account. These accounts allows you to legally avoid
federal income tax by putting 100% of the health plan's
deductible, up to $2,700 for singles or $5,450
for families, into your HSA account.
Even though
you have received a tax-deduction by putting your money into
this account, the money is still yours to spend tax-free,
as long as you spend it on qualified
medical expenses. Since you have a high-deductible
plan, this would of course include any expenses incurred from
going to the doctor, purchasing prescription drugs, or paying
other expenses toward your plan's deductible.
In addition
to being able to withdraw money tax-free to cover these types
of expenses (which might not otherwise be covered by a traditional
low-deductible high-premium policy), you can use the HSA account
to cover costs that would not normally be covered by a health
insurance policy, such as alternative medical treatment, orthodontia,
or non-prescription medications.
More information
about how HSAs work, along with instant quotes on qualifying
high-deductible health plans, can be found at:
HSA
for America
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