|Individual & Family Health Insurance Plans | HSA Plans | Contact Us |

Health Savings Accounts are fairly new. They were signed into law in December of 2003. They are a better version of medical savings accounts or MSAs. An HSA is an account, similar to an IRA, devoted solely to health expenses and used with a high deductible health insurance policy.

The idea is the high deductible insurance policies cost less and this excess money can be saved in a HSA account. The funds are then used for medical fees until the deductible is met. Any unused portion remains in the account , earns tax-free interest and rolls over year to year.

There are many tax advantages with an HSA: within a limit, money deposited into an HSA account is exempt from income tax; some states also make the money free from state tax; the money withdrawn to pay medical expenses is also tax free; HSA money is portable and can be taken with you when changing jobs; and again, money not used is allowed to stay in the account, earning interest that is not taxed.

After the age of 65, you can withdraw your money from the account for any reason. That leads into a few disadvantages: until the age of 65, any money spent out of the account that is not on medical needs is added to the person’s gross income for tax purposes and will generate an additional 10% tax.

 

You must always have a high deductible health insurance policy in place, with the deductible a minimum of $1000 for single coverage and $2000 for family coverage. There is also a stipulation that in the insurance policy, out-of-pocket expenses cannot be more than $5000 for individuals and $10,000 for families. One more negative issue: there could be potential problems for employers when initially working with the new HSA and the existing health plan.*

Advantages

- Health Savings Accounts provide lower premiums for health insurance

- Can be a great investment vehicle, and provide tax benefits

- Can use pre-tax dollars to pay for medical expenses

Disadvantages
- You must be under 65 years of age
- You cannot be claimed as a dependent under anyone else’s tax return
- You must have a high deductible health insurance policy at the time of deposits into the HSA account
- You also cannot have other health insurance at the same time, except the following types: specific injury and accident, disability, long term, dental and vision.

 

If you are interested in more information on companies that offer HSA plans please check on the plasn at Instant Quote or call us Toll Free 1-800-367-0241. If you would like to get more information on IRS regulations and materials on HSA please visit our client services page or contact us. (* Info Based of 2005 IRS Information)

"Our pledge is to provide our clients with superior customer service and product knowledge in order to guide them in making the most informed decisions."

| Contact Us | About Us | The Companies |

©Copyright 2005 Boone Insurance Associates. All Rights Reserved.