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June 21, 2011
What Links Health Savings Accounts And High-deductible Plans?
If you want to take advantage of the benefits that Health Savings Accounts offer, you need to have a qualified high-deductible health plan. For singles, you need to have a deductible between $1,200 and $5,950. For those who have a family, your deductible should be between $2,400 and $11,900. Not every plan in that deductible range allows you to set up a Health Savings Account (HSA), though.
You can find plans that are eligible to work with an HSA here on our site. With the right plan, you can start funding your own HSA and earning tax-free interest. If you do need to buy health care that's not covered by your policy, you can with funds still without paying taxes on the money to pay for qualified health-related expenses for yourself, your partner or spouse, or your dependents.
Another good thing about having an HSA plan is that it allows you to take a tax deduction for your HSA contributions. If you don't need the money for health care, it will be rolled over to the next year and will keep growing with tax-free earnings until you reach retirement age. You can continue to use it for health care then, or withdraw funds to pay for anything at all and just pay taxes on it then like an IRA.
A Health Savings Account is a hot commodity now because you get a federal income tax deduction, and usually a state tax deduction, for money you contribute to it even if you take the standard deduction and don’t itemize deductions. On our website, you can learn more about setting up your HSA and how HSA plans can be your best tax tip ever.
Posted by Wiley Long at June 21, 2011 08:05 AM