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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 May 7, 2011 04:47 AM