« Health Savings Accounts Lower Out-Of-Pocket Costs | Main | Health Savings Accounts Reformed Health Insurance »
October 07, 2011
How Health Savings Accounts Cut Taxes
Tax day 2012 is still a ways off, but those who want to pay less taxes are maxing out their Health Savings Account contributions now. What a lot of people don’t realize is that their health insurance plan can be turned into a fabulous way to save on taxes by adding a Health Savings Account or an HSA.
When you have an HSA Plan, you can make tax-deductible contributions to pay for many out-of-pocket health care costs. You have until April 15, 2012 to make the maximum HSA contribution for 2011. The maximum contribution for singles is $3,050 or $6,150 for families.
Tax-free HSA withdrawals are allowed when you use the money for qualified medical expenses. If you use HSA funds for other purpose, there is a 20-percent penalty on the withdrawal up until you turn 65. Just like with an IRA, any unspent HSA money rolls over year after year to build your savings.
An HSA can also serve as an investment vehicle. HSA money can grow tax-free when invested in bonds, money market funds, mutual funds or stocks. You can also earn tax-free interest in a traditional savings account. Learn more about the advantages Health Savings Accounts offer here on our site:
Posted by Wiley Long at October 7, 2011 04:37 AM