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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 May 22, 2011 04:16 AM