Health Savings Accounts
…are not for everyone, but they might be ideal for you!
A Health Savings Account (HSA) is an account that you can put money into to save for future medical expenses. There are advantages to putting money into these accounts, including favorable tax treatment.
Who can have an HSA?
Any adult can contribute to an HSA if they:
- Have medical coverage under an HSA-qualified “high deductible health plan”;
- Have no other first-dollar medical coverage;
- Are not enrolled in Medicare;
- Cannot be claimed as a dependent on someone else’s tax return.
Advantages of HSAs
- Security: Your high deductible insurance and HSA protect you against high, unexpected medical bills.
- Affordability: Health insurance premiums may be lowered by switching to health insurance coverage with a higher deductible.
- Flexibility: You can use funds in your account to pay for current medical expenses, or save the money in your account for future needs, such as:
- Health insurance or medical expenses if unemployed
- Medical expenses after retirement (before Medicare)
- Out-of-pocket expenses when covered by Medicare
- Long-term care expenses and insurance
- Savings: You can save money in your account for future medical expenses and grow your account through investment earnings.
- Control: You make all the decisions about:
- How much money to put in the account
- Whether to save the account for future expenses or pay current medical bills
- Which investments to make
- Portability: Accounts are completely portable, meaning you can keep your HSA even if you:
- Change jobs
- Change your medical coverage
- Become unemployed
- Change marital status
- Ownership: Funds stay in your account year to year, like an IRA. No “use it or lose it” rules for HSAs.
- Tax Savings: An HSA provides you triple tax savings:
- Tax deductions when you contribute to your account
- Tax-free earnings through investment; and,
- Tax-free withdrawals for qualified medical expenses
How much can I save on medical insurance premiums?
Up to $7,800/year in lower medical premiums.
How much can I contribute to an HSA?
As long as the HSA qualified plan is in effect prior to 12/31/2019, an individual can contribute up to $3,500 and a family can contribute up to $6,900. Individuals 55 years and over can contribute an additional $1,000.
For more information on whether an HSA is right for you, contact Marc Haberman.
