Health Saving Accounts & Health Reimbursement Accounts
A Health Savings Account (HSA) is an account that you can put money
into to save for future medical expenses. There are certain
advantages to putting money into these accounts, including favorable
tax treatment. HSAs were signed into law by President Bush on
December 8, 2003.
Contributions to your HSA can be made by
you, your employer, or both. However, the total contributions are
limited annually. If you make a contribution, you can deduct the
contributions (even if you do not itemize deductions) when completing
your federal income tax return.
Contributions to the
account must stop once you are enrolled in Medicare. However, you
can keep the money in your account and use it to pay for medical
expenses tax-free. You can use the money in the account to pay
for any “qualified medical expense” permitted under federal tax
law. This includes most medical care and services, and dental and
vision care, and also includes over-the-counter drugs such as aspirin.
Advantages of HSAs
Security —Your high deductible insurance and HAS protect you against high or unexpected medical bills.
Affordability —You should be able to lower your health insurance premiums by switching to health insurance coverage with a higher deductible.
Flexibility
—You can use the funds in your account to pay for current medical
expenses, including expenses that your insurance may not cover, 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 the 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 into the account
Whether to save the account for future expenses or pay current medical expenses
Which medical expenses to pay from the account
Which company will hold the account
Whether to invest any of the money in the account
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
Move to another state
Change your marital status
Ownership – Funds remain in the account from year to year, just like an IRA. There are 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
tax-free withdrawals for qualified medical expenses
To receive an HSA quote, please contact: Gary Rosenberg (800) 727-0001 Ext. 510
