Thursday, February 17, 2011

Should You Get an HSA Account?


What's it going to be for you this year? Tax-time gain or tax-time drain? Here's a tip that might help you save on taxes and save for future medical expenses.

If you have a high-deductible health plan, recent tax laws allow you to set aside money for your health expenses. Known as the Health Savings Account (HSA), the money in this account can be used to pay for your medical expenses, as well as other qualified expenses like vision or dental services that are not covered by your health plan.

There are two parts to an HSA: the health plan, which is administered by a health insurance services provider, and the savings account, which is administered by a bank or financial services institution.

Once you set up an HSA account, your money remains there for your medical expenses. An HSA is an attractive option because it allows you to save money for current and future medical expenses, tax-free! However, there is a maximum contribution limit for the HSA plan, depending on whether it's an individual plan or a family plan, as well as the age of the account holder.

Here's a quick recap of the benefits of an HSA:

  1. Tax-free savings and growth that you can use towards the deductible payments in a high-deductible health insurance plan.
  2. Fully tax-deductible contributions (for 2011, up to a maximum of $3050 for an individual HSA and $6,150 for a family HSA)
  3. Additional age-based contribution allowance of $1000 for individuals over the age of 55. If both, husband and wife, are over 55, each is allowed to make the additional contribution of $1000.
  4. No penalties as long as the money from the HSA account is used to pay qualifying medical expenses.
  5. No penalties if the money is withdrawn after you turn 65.

For more information and questions about an HSA account, contact an experienced insurance broker. Allied Brokers has been serving clients' insurance needs since 1954. Knowledgeable agents at the Allied office can help you determine whether you qualify for an HSA, and help you choose the best plan for your needs. Call (650) 328-1000 or visit www.alliedbrokers.com for more information.

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