Fort
Collins, CO (PRWEB) December 17, 2007 -- Last year's "Tax Relief and Health
Care Act of 2006" had several provisions that have made it easier to open
and fund a Health Savings
Account (HSA), including the option of a one-time tax-free rollover from
an IRA into the HSA. This change has contributed to the end-of-the-year
surge of HSA applications according to leading health insurance broker HSA
for America.
"We're
getting a tremendous number of inquiries from people who want to know how
they can fund their account with money from their IRA," said HSA
for America President Wiley Long. "HSA-qualified health
insurance plans have high deductibles of $1,100 or more. By doing a
tax-free rollover from their IRA, individuals can immediately fund their account
so that the deductible can be covered 100%. That basically removes the
risk of going with a high-deductible plan."
Health
Savings Accounts are special tax-favored savings accounts that anyone
with a qualified high-deductible health insurance plan can open and fund.
Any money put in the account is tax deductible, and can be used tax-free to
pay for future medical expenses. If the money is not withdrawn, it continues
to grow tax-deferred like an IRA. HSAs first became available in January
2004, and today nearly eight million people are covered by an HSA-qualified
health insurance plan.
"HSA
plans have much lower premiums than traditional co-pay plans, but they
do have a higher deductible. Medical expenses that someone incurs before
they meet their deductible can be paid for from the HSA, but if they've just
opened their HSA they may not have had enough time to accumulate much money
in it. The tax-free IRA rollover solves that problem," said Long.
Both
IRAs and HSAs are special tax-favored accounts that can be funded with tax-free
money, and that grow tax-deferred. But HSAs have an additional tax advantage
over IRAs: if the money is withdrawn to pay for qualified medical expenses,
taxes never need to be paid on those funds. This makes HSAs a much preferred
way to save for future medical expenses, according to Long.
"According
to Fidelity Investments, the average couple retiring in 2007 will need over
$200,000 to cover medical expenses, not even counting dental, over-the-counter
medications, or long-term care. And that amount is going up every year.
Those who have an HSA
could have thousands of additional dollars available to them to cover these
expenses in their retirement years."
To
help people who are buying their own health insurance understand these changes,
HSA for America is hosting weekly
HSA teleseminars throughout the rest of 2006. "If someone can get their
coverage in place before December 31, they can lock in 2007 rates for the
next 6 - 24 months, and they can get a tax deduction for contributions made
before April 15th."
About
HSA for America:
HSA
for America is the nation's leading independent health insurance
firm specializing in individual and family coverage that works with a Health
Savings Account. Through our comprehensive website we offer complete
information on Health Savings
Accounts and qualifying
HSA health insurance plans. We offer instant quotes, online health
insurance applications, and access to several banks that can act as an HSA
administrator for your account.
