(PRWEB)
November 29, 2005 -- Health
savings accounts (HSAs) enable individuals to set up tax-favored accounts
that can be used to pay for medical expenses that are not covered by their
health insurance. Individuals are eligible for an HSA only if they have
a qualifying high deductible health insurance plan with an annual deductible
of at least $1,100 for individual plans, or $2,100 for family plans.
Because these plans have higher deductibles, premiums are usually at least
30% lower than typical PPO plans.
Any money deposited in the HSA is tax deductible. For 2006 there is
a contribution limit of $2,700 for individuals, and $5,450 for a family.
Funds can be withdrawn from the account tax-free at any time to pay medical
expenses, including doctor visits, prescription drugs, dental, eyeglasses,
and even over-the-counter medications like aspirin. Money that is not
withdrawn for medical expenses grows tax-deferred like an IRA, and can be
withdrawn penalty-free at age 65 for any reason.
Experts recommend having your HSA
in place by January 1 in order to maximize your tax benefits. “Contribution
limits are pro-rated based on the total number of months during the year in
which you have a qualifying health plan”, says Wiley Long, president
of HSA for America, an online health
insurance agency specializing in HSA-qualified
plans. “Additionally, most insurance companies offer a one-year
rate guarantee, so by getting coverage in place before January 1st, people
will not only be able to maximize their tax deductions but they may also be
able to lock in 2005 rates for the next 12 months”.
Long gave an example of a family that reduced their premium from $458 per
month to $305, saving them $1836 in premiums over the course of a year.
“If they deposit $5,450 in their health savings account, they may save
another $1,526 in federal income taxes. People are realizing that the
lower premiums combined with the tax savings can reduce their total health
costs by 50% or more.”
Long recommends that individuals and families interested in lowering their
health insurance costs should take action immediately, since it can take two
to three weeks to get a new plan in place.
About HSA for America:
HSA for America is a nationwide
brokerage firm specializing in individual and family health insurance plans
that are qualified to work with Health Savings Accounts. HSA
for America represents many different insurance companies,
offers instant quotes, online applications, and comparisons of HSA
administrators.
