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May 30, 2011
Wisconsin Gives Health Savings Accounts State Tax Deduction Status
Health Savings Accounts are attractive because contributions to these accounts are tax deductible on federal income tax returns. The choice of making Health Savings Account (HSA) deposits deductible on state tax forms is left up to each state. Almost all states have chosen to follow the federal example on this and Wisconsin is the latest state to adopt that legislation beginning with the 2011 tax year.
Individual coverage health plans that can be combined with an HSA have a deductible of at least $1,200. Family HSA plans have deductibles starting at $2,400. These high-deductible plans usually cost much less than co-pay plans, which don't require policyholders to meet a deductible.
Once Health Savings Accounts are funded, they can be used to cover the deductible. Since HSA contributions are tax deductible, both the premium and tax savings can be channeled into the HSA.
Forty-seven states allow residents to take a state tax deduction for a Health Savings Account. Wisconsin officials estimate that residents, on average, will save around $168 per person each year with the change.
Some legislators opposed the bill and estimated that lost tax revenue would grow to around $49 million in a couple of years. However, Governor Walker said the tax deductions were necessary and promised to show how the cuts would be paid for when the new state budget is ready.
Posted by Wiley Long at 12:05 PM | Comments (0)
May 25, 2011
Are Health Savings Accounts Linked To Employment?
Unlike a flexible spending account, Health Savings Accounts are independent of employment. Meaning that a Health Savings Account (HSA) is yours to keep whether you become unemployed or not. Even if your employer does not offer an HSA plan, you can start one on your own. Simply purchase an HSA-qualified high-deductible health plan and you’re ready to open your own HSA.
Getting an HSA plan is beneficial because the money you place in your health savings account earns interest tax-free. You get to use the money in your HSA for future qualified medical expenses.
Withdrawals from your Health Savings Account for qualified medical costs are also free of tax and you don’t even have to itemize deductions to claim your HSA contribution. Your HSA funds even roll over at the end of the year to continue growing tax-free the next year.
Although you own your HSA, your employer can make contributions to your health savings account. The contributions are tax-deductible on the employer’s part and are not included in your gross income. If you decide to leave that job or lose it, the contributions made by the employer stay with you. Even after you retire, you get to keep and use the money in your HSA.
Want to see more? On our website, it's quick and easy to compare rates for HSA-qualified insurance plans. You can learn about starting your HSA and selecting an HSA administrator here, too.
Posted by Wiley Long at 04:17 AM | Comments (0)
May 22, 2011
A Health Savings Account Can Help Lower Your Taxes
If you want to cut down the taxes you are paying, why not combine a qualified high-deductible health insurance plan with a Health Savings Account (HSA)? If your health is good, switching to a high-deductible HSA plan can help you save 30 to 40 percent in premiums compared to a co-pay plan.
Another advantage of an HSA is that it can lower your federal tax as well as your state income tax in almost all states. Most health care costs are considered tax deductible when paid for from an HSA. You're allowed to take a tax deduction for all qualified health care expenses even if you don't itemize on your tax returns.
HSA plans purchased after health care reform became law, include services that are recommended to help prevent disease. Now that you can maintain recommended health care without a lot of out-of-pocket expense, high-deductible plans make more sense.
Just like a medical IRA, the money you place in your Health Savings Account is tax-free. When you can put pre-tax money aside to pay for future medical costs, you can build up your savings to cover health care before your deductible has been met. When you don't need those funds, let them grow tax-free year after year.
After you retire, you can use the money you placed in your HSA for anything at all and just pay taxes on it. You can even continue to use the funds for health care and not pay any tax on it. Consider how much you can save in income taxes, with lower premiums and by earning tax-free interest. Find out more about Health Savings Account plans here on our website, including which high-deductible plans will allow you to open an HSA.
Posted by Wiley Long at 04:16 AM | Comments (0)
May 19, 2011
Get A Health Savings Account Before It’s Too Late
Healthy as we may seem today, we never know when illness can strike. Would switching from a full-coverage plan to a high-deductible health plan with a health savings account (HSA) be a wise decision to make? What if you need to meet a high deductible? You may be surprised to find that when you add up how much you can save on premiums and by reducing your taxes, it could actually cost less even if you do have to pay for health care until a high deductible has been met.
If you have good health and do not need much medical care, a high-deductible insurance plan that has low premiums can be a "no brainer." If you are in a high tax category, an HSA or Health Savings Account can definitely help lower your federal income tax and state income tax in almost all states.
Even though you may have to pay for health care until you meet that high deductible, if you get new coverage now, you won't have out-of-pocket costs for preventive services. Those are 100-percent covered with health care reform. For most health care you need before meeting your deductible, you can utilize a special form of savings that can only be opened after you have a qualified high-deductible health plan known as a Health Savings Account. The money you place in your Health Savings Account earns tax-free interest, which aids you to grow your balance quickly.
The funds you don’t use will be rolled over every year just like an IRA. HSA plans can even double as a retirement fund and could really come in handy when it comes to taking care of your health care costs. An HSA is indeed a tool that can help you handle future medical bills. Find out more about Health Savings Account plans on our website, including which high-deductible plans will allow you to open an HSA, how to pick an administrator for your HSA and which health care expenses you can pay for from an HSA.
Posted by Wiley Long at 08:40 AM | Comments (0)
May 16, 2011
Health Savings Accounts May Increase With Health Care Reform
Health Savings Accounts may start growing at a faster rate when most U.S. citizens are required to maintain minimum health insurance coverage. However, the Patient Protection and Affordable Care Act only directly addresses Health Savings Accounts with a couple of minor provisions.
Health Savings Accounts can only be combined with certain qualified high-deductible (and often low-premium) individual health insurance plans. Paul Fronstin, director at the Employee Benefit Research Institute (EBRI) says, "It's the only triple tax-advantaged plan out there." In addition to low premiums, Health Savings Accounts offer tax-free earnings and tax deductions.
The Affordable Care Act changed the penalty for using HSA withdrawals for non-qualifying expenses before age 65 from 10 percent to 20 percent. In addition, the act took over-the-counter (OTC) medicines off the list of health care that could be purchased through an HSA. OTC medication now only qualifies as an eligible HSA expense if your doctor will write you a prescription for it.
An EBRI survey showed $7.7 billion in Health Savings Accounts and Health Reimbursement Arrangements in 2010 being held in 5.7 million accounts. While total assets in such accounts have been increasing annually, the average balance per account has remained between $1,320 and $1,419 since 2007. The survey also showed that 37 percent of those who were eligible to open an HSA did not have one, either because they couldn't fund it or did not see a need for one.
Posted by Wiley Long at 11:49 AM | Comments (0)
May 13, 2011
Health Savings Accounts Make Their Case
Proponents say that only Health Savings Accounts separate health care from insurance. For example, say you have family coverage through work that costs the employer $12,000 annually. If your employer pays for all the premiums and you have $25 co-pays to see a doctor, your expense is limited.
In contrast, if your employer still spends $12,000 a year, but puts $5,000 of it into a Health Savings Account (HSA) in your name, $5,000 of your health care benefit is now legally yours. Instead of a co-pay plan, your employer must buy a High-deductible Health Plan that's qualified to work with an HSA.
Preventive care is 100-percent covered, but you'll have to pay for other services until the deductible has been met. Any Health Savings Account funds you don't spend on health care are yours to keep. That's distinctly different from Flexible Spending Accounts, which are “use it or lose it” at the end of the year.
Each year, your employer contributes $5,000 to your HSA. As long as your health remains good, the balance in the HSA account can grow with tax-free earnings. It's yours to keep if you change employers or retire.
Posted by Wiley Long at 09:50 AM | Comments (0)
May 10, 2011
What Do Health Savings Account Plans Mean For Preventive Care?
The American Journal of Managed Care published the largest assessment of Health Savings Account plans to date. The new RAND Corporation study showed that Health Savings Account plans significantly cut health spending and motivated patients to cut back on preventive health care.
With more than 800,000 families around the country participating, researchers found that shifting to Health Savings Account plans with deductibles of at least $1,000 correlated with an average drop in health spending of 14 percent compared to families who had health plans with lower deductibles.
At the same time, families that moved to high-deductible plans significantly cut back on preventive health care, included critically needed services. They cut back on cancer screenings and routine tests for diabetes, as well as childhood immunizations.
Amelia M. Haviland, a study co-author and a statistician at the nonprofit RAND research organization said, "This suggests people are cutting both necessary and unnecessary care."
High-deductible health plans have been on the increase in recent years. About 20 percent of U.S residents with employer-sponsored health coverage were enrolled in such plans by 2009. By 2010, a survey showed more than 54 percent of big employers offered one or more high-deductible health plan.
Haviland cautions, "We saw that patients reduced preventive care, and if this persists, it is possible to have health consequences in the future. These cutbacks could cause a spike in health care costs down the road if people end up sicker and need more-intensive treatment. However, there is no research or data to support such a spike in health care costs."
Posted by Wiley Long at 02:48 PM | Comments (0)
May 07, 2011
A Health Savings Account Could Be Your Best Tax Tip Ever
Since 2004, the number of people getting Health Savings Accounts has been constantly increasing. This special kind of account helps you grow your money tax free. You can use the funds for qualified health care expenses or let the money continue to grow. The remaining balance will be rolled over to the next year and is yours to keep whether you are employed, looking for work or retired.
HSA plans are appealing because they help reduce your federal income tax and usually your state income tax as well. In addition, with an HSA plan, withdrawals are tax-free as long as they are used for qualified medical purposes. For non-medical expenses, a 20% penalty fee will be incurred, but after age 65 you can withdraw the money penalty-free for any purpose.
To take advantage of the benefits offered by an HSA plan, the law requires that it should be combined with a qualified high-deductible health plan. These deductibles on these plans start at $1,200 for individual coverage or $2,400 for family plan coverage.
Many trusted insurance companies, such as Aetna and Blue Cross Blue Shield, offer HSA plans, but keep your HSA administrator separate from your insurance company. That way, you can easily switch to a different HSA-qualified plan and you won't have to change your HSA administrator at the same time. You can find out more about how to choose an HSA administrator right here with our website's educational resources.
Posted by Wiley Long at 04:47 AM | Comments (0)
May 04, 2011
Is A Health Savings Account The Same As A 501(c)3?
If you are wondering if Health Savings Accounts are the same as 501(c)3 corporations, then the answer is no. A 501(c)3 corporation is a tax-exempt organization formed for the purpose of educational or charitable activities. Health Savings Accounts, on the other hand, are simply a tax-advantaged way of saving money when it comes to paying for future medical bills.
A Health Savings Account basically helps reduce your income taxes - both federal and almost always state taxes. Contributions placed in your HSA are tax-deferred and withdrawals are tax-free when used to pay for qualified medical expenses. A 20-percent penalty may apply if you use the money for other purposes.
A health saving account must be combined with a qualified high-deductible health plan. These high deductibles start at $1,200 for individual coverage and $2,400 for family coverage. However, you must take note that HSA plans also have underwriting policies. Having pre-existing health conditions might cause your application to be denied. Our independent agents can suggest which companies have less strict underwriting policies to help you find coverage.
While rates for HSA-qualified plans are generally lower than standard co-pay plan premiums, your premiums will still be subject to rate increases. Maintaining your health will make it easier for you to switch plans when this occurs. We make it even easier by providing you with instant quotes from different well-known insurance companies that offer HSA plans.
Posted by Wiley Long at 10:11 AM | Comments (0)
May 01, 2011
Health Savings Account Tax Tip
Although Health Savings Accounts have been around since 2004, many people are still missing out on the tax savings they offer because they don't understand how a Health Savings Account (HSA) works.
HSA Plans are really simple. They're so easy to use that you don't even need to itemize deductions to take advantage of their savings when you file your taxes.
Kathy Pickering of H&R Block says, "You put your money into the Health Savings Account tax free, and then it grows tax free. The interest you earn on it is tax free, and when you take money out for qualified medical expenses, that's tax free as well." Any HSA funds you don't spend on qualified health care, unlike money left in a flexible savings account, just roll over year to year and continue earning tax-free interest.
Pickering points out that: "If you can hold on to your Health Savings Account, say as you lose your job, if you move to a new job, you can still use those funds and then if you can hold on to it until retirement. That's just additional money that you can use later when you need it." You can continue to withdraw funds tax-free to pay for qualified health care or spend the money for whatever you like and just pay taxes on the amount withdrawn.
Posted by Wiley Long at 11:31 AM | Comments (0)