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February 21, 2011
Learn How Health Savings Accounts Work
Most people become interested in a Health Savings Account (HSA) because they want to lower their insurance premiums. The high-deductible insurance plans that are combined with an HSA typically cost less in monthly premiums than full coverage insurance plans. An HSA also lets investors save tax-free and withdraw to pay for health care without losing that tax-free advantage.
At the end of 2010, the deductibles on plans eligible to permit opening a Health Savings Account started at $1,150 for individuals and at $2,300 for a family. Even before the deductible is met, plans must cover preventive care, including wellness exams and vaccinations.
Out-of-pocket costs for individuals with HSA plans are limited to $5,800. That limit is $11,600 for family plans. Both individuals and their employers can make deposits into the same HSA as long as contributions don't exceed the maximum amount allowed. That limit is is $3,050 for individual accounts or $6,150 for family plans.
HSA funds are completely independent of employment. If an individual leaves a job, he may discontinue his group coverage or purchase COBRA insurance to maintain the same high-deductible coverage. If he gets another high-deductible plan via a new employer or an individual plan, he is still eligibile for HSA tax benefits. Even if he has no health insurance, the HSA funds are his to keep although the tax benefits of the HSA will be lost. Learn more about how Health Savings Accounts work on our website.
Posted by Wiley Long at February 21, 2011 10:13 AM