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July 28, 2005
Minnesotans Get Tax Break on Health Savings Accounts Contributions
The Governor of Minnesota will sign the State budget that was hammered out with the State legislature, making Health Savings Account (HSA) contributions tax deductible from Minnesota state income taxes.
Minnesota was one of only 9 states that did not allow a state income tax deduction on contributions to Health Savings Accounts. The federal government currently allows federal income tax deductions for contributions made to HSAs.
The tax-deductibility makes HSAs a very attractive choice for anyone who pays for their own health insurance. Because they have a higher deductible, HSA-qualified health insurance plans already have a much lower premium than traditional plans. When the tax savings are also computed into the equation, many individuals are cutting their health insurance costs by 80% or more.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at July 28, 2005 10:40 AM
Comments
The problem for those with HSAs in the US is not so much the tax efficiency of the savings but rather the lack of transparency with admissible hospital and medical costs that can be funded from HSA savings. The 46 million uninsured in the US spend less than 6 percent of hospital costs compared to the 200 million privately insured that spend more than 30 percent of the hospital bills. Those self-funding hospital services in the US end up paying as much as 75 percent more for the same services that would be billed to an insurer. With that kind of price difference a lifetime of HSA savings can be depleted very quickly. The solution is to use HSA savings to fund hospital services in lower cost domiciles, reducing the cost of care when expenses are incurred will preserve savings and make the tax advantages more worth while. As we are all exposed to the risk of injury or illness it makes absolute economic sense to plan ahead, on the off-chance that should something happen, your savings wont be unnecessarily and avoidably be depleted by overcharging.
Posted by: Kenneth Hunt at August 7, 2007 07:52 AM