Health Savings Account
Great Ways to Save Money-Tax Free
So many people today are looking for ways to save money it’s amazing that very few people understand the advantages of a Health Savings Account. An HSA (Health Savings Account) is a tax-sheltered account that you own for the purpose of paying qualified medical expenses for yourself, spouse, and your dependents.
The HSA allows you to put money away in an account where it can grow tax free on a yearly basis. You have the opportunity to invest funds in interest bargaining accounts, mutual funds, and stocks, which all gains are tax free as well. Many people confuse the HSA with the Flexible Savings Account (FSA) in which all monies must be used during the calendar year of the contribution.
Having a Health Savings Account is a great way to save money for health related expenses before or after retirement. It’s a great solution for health insurance plans that don’t offer pregnancy or birth coverage since you can save for these events in your HSA. In addition, your monthly premiums are usually 20%-30% lower with an HSA.
Some of the great benefits by having a Health Savings Account are the following:
- Your HSA voluntary contributions are tax-deductible.
- Interest earned on your account is tax-free.
- Tax-free withdrawals may be made for qualified medical expenses.
- Unused funds and interest are carried over, without limit, from year to year.
- You own the HSA and it is yours to keep - even when you change plans or retire.
August 13th, 2008 at 1:49 pm
Great post! We’re finding that more and more Michigan small business owners want to offer HSAs, but you are correct, HSAs are often confused with FSAs. Your health insurance agent can help you sort through the details.
August 13th, 2008 at 2:14 pm
Interesting….I didn’t know this account carried over from year to year.
August 13th, 2008 at 3:07 pm
This is a great option for healthy people. I could be wrong, but I believe there is one caveat that you have to have a health insurance plan with a high deductible. This can negate any cost savings for those who have chronic conditions and use their insurance heavily. I’m in this category and found I saved the most by using a higher-premium PPO with no deductibles. But, if you’re only an occasional user of your health plan, this would be very helpful.
August 13th, 2008 at 4:13 pm
Great post Lorne! If your readers would like to learn more about all the great advantages of Health Savings Accounts, they could visit our website. We have a lot of great articles that they can read on this page: http://www.Health–Savings–Accounts.com/articles.htm
August 14th, 2008 at 5:48 pm
There are so many positives for people to have HSA’s, I only described a few of the many benefits. The high deductible should be thought of as self insurance. People are much less apt to spend there own money on frivilous expenses. Some companies transition from standard plans to HSA’s by funding the deductible the first year. At least you can ween the employees off the traditional plan.