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August 14, 2010
Health Savings Accounts: Why Are Customers Investing Record Amounts In Them?
J.P. Morgan Treasury Services manage more than 530,000 health savings accounts for people who have deposited a combined total of approximately $800 million nationwide. Health savings accounts are growing so fast because they allow individuals to save tax-free to pay their future medical bills.
At the end of 2009, 45 percent of J.P. Morgan's health savings account (HSA) customers held more than $1,000 in their accounts. That represented a 10 percent increase from the previous year.
The percentage of accounts that held more than $2,000 also went up from from 20 percent to 31 percent during that same time period. Last year, more than half (68 percent) of these HSA owners added more to their health savings accounts than they spent every month.
Health Savings Accounts have become integral to the effort to encourage us to become better healthcare consumers. These tax-advantaged accounts can be paired with certain qualified high-deductible health policies that keep premiums low by requiring individuals to pay the first $2,500 and families to pay the first $5,000 of their medical bills. Employers and employees can both contribute to an HSA tax-free, and those deposits can be used to pay for medical expenses until the deductible is met.
As long as health savings account funds are used for HSA qualified medical expenses, no taxes are paid. On Jan. 1, the penalty for withdrawing health savings account funds for non-medical purposes will be increased to 20 percent. Once you turn 65, you can withdraw without facing any penalty, pay the taxes and you're free to use your health savings account balance for any purpose. If you want to learn more about the advantages of health savings accounts, check out our website for breaking news links, strategies to set up an HSA and tips to get the greatest value from your HSA.
Posted by Wiley Long at August 14, 2010 10:28 AM