Monday, August 12, 2019

How a Health Savings Account Can Help You

Every penny counts when it comes to your health insurance especially these days where there is every-rising insurance rates and premiums and increasing hospital and drug costs. Trying as much as possible to save money with health coverage for you and your family is important and make use of every opportunity available to do so. One of these opportunities is getting a health savings account.
An essential way to set aside money to pay for insurance and your medical bills is by getting a health savings account (HSA). You would also be saving money on taxes through this process. This article is to give details of HAS and how it really operates.

What is an HSA?
You can qualify to open an HSA if you have a high deductible health plan or HDHP. You will be offered the option of opening this type of account sometimes by employers or health plans, but you also have the ability to open one privately at most financial institutions. The IRS however, has certain deductible limitations they have set that you will need to qualify for in order to open an HSA:

  • Individual out of pocket maximum is $6,500
  • Individual minimum deductible is $1,300
  • Family out of pocket maximum is $13,100
  • Family minimum deductible is $2,600

The amount you can contribute annually is mandated by the government even though you contribute financially to your account. The limitations are as follows:

  • Individual yearly contributions limits are $3,400
  • Family yearly contribution limits are $6,750
  • Seniors 55 and older can add $1,000 over the preset limitations
  • Seniors who have Medicare cannot contribute to an HSA

How Can You Use an HSA?
You receive either a debit card or checks when you open an HSA and this will enable you to use the money in your account at any time. These funds can be used to pay for copays, coinsurance, deductibles and other medical expenses. You cannot usually spend the money from your HSA on paying your premium payment and this is the only drawback of the HSA. You also need to be aware that any money spent on non-qualified health care costs is then subject to tax that you will be responsible for paying. The money that you have in your account never expires and can be continued to be used for qualifying medical expenses. Seniors who are no longer able to contribute can also still use the money in their HSA to cover medical costs.

What are the Tax Benefits of an HSA?
There are substantial tax benefits to having an HSA and the reason is because the money placed into the account is not taxed, the money taken out of the account is not taxed and the money has the ability to grow in your account tax-free as well. Another benefit is that your income will be taxed minus your HSA contributions, which lowers your tax responsibility. Utilizing an HSA can potentially be a large money-saving opportunity for you and your family and make it easier to afford proper health care.

Additional Investment Benefit of Your HSA
A unique investment opportunity is offered to you when you open an HSA account. It gives the opportunity of being able to invest the funds in your account into stocks, mutual funds and other opportunities. Your funds are not taxed when you invest in your HSA and you do not have any required distribution limitations. It does not need to follow guidelines in the Federal Insurance Contributions Act or FICA if your account is funded through a company payroll.

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