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May 26, 2009
Health Savings Accounts Come to Puerto Rico
Health Savings Accounts have now been established in Puerto Rico. Puerto Rico will now allow contributions to the accounts to be exempt from personal income tax, and will apply to the taxable years that commence on and after January 1, 2009. Under Health Savings Accounts, the insured will choose the provider and/or health service that they want to receive payment and will pay for those services with the funds that had accumulated in their Health Savings Account, covering up to the total annual deductible.
The employee and the employer both may make contributions to the Health Savings Accounts. Once the insured has covered the high annual deductible, either charging the HSA qualified expenses eligible for medical attention to the funds in the Health Savings Account or with another source of funds, coverage from the traditional medical plan will begin.
The Health Savings Accounts will allow annual contributions that are not considered income received by the taxpayer, that are deductible when taxed, and after the first year are converted into a savings vehicle with tax benefits. Upon reaching the age of 65 years, the owner of the Health Savings Account may withdraw the accumulated funds and use them for any purpose (it does not require a medical expense) without having to pay penalties, but will pay tax on the withdrawn amount. Amounts deposited in a Health Savings Account beyond the limits for each year are subject to a 6% penalty.
Posted by Wiley Long at May 26, 2009 09:50 AM