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Health Savings Accounts (HSAs)
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Health
Savings Accounts (HSAs)
By: Adam Ledbetter, CFP®
The Henssler Financial Group Position Paper |
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 The
Medicare reform bill signed into law in December 2003 by President Bush provided
a new option for health care in the form of Health Savings Accounts (HSAs).
Below
are a few facts about these accounts:
-
HSAs
are tax-sheltered medical savings accounts. -
Contributions
are 100% tax deductible for employers, as well as either pre-tax or tax deductible
for employees. -
To
be eligible to establish an HSA account, you must first set up a high deductible,
HSA-qualified health insurance plan. Individuals
are eligible to set up an HSA if they are not covered by someone else's health
insurance, are not enrolled in Medicare, and cannot be claimed as a dependent
on someone else's tax return.
-
Maximum
contributions are $2,900 for singles, and $5,800
for families. People 55 years of age and over can contribute an additional $900
in 2008.
-
Deductibles
for singles are a minimum of $1,100; and $2,200 for families.
-
Out-of-pocket
maximums can be up to $5,600 for singles, and up to $11,200 for families.
-
The
contributions grow tax-deferred until needed. Money withdrawn for qualified medical
expenses is tax-free. If withdrawals are not used for qualified medical expenses,
then the amount will be taxable. There will be a 10% penalty for those under
the age of 65.
-
Money
is readily accessible since most accounts offer the use of checks and/or debit
cards. -
Some
medical expenses not covered by medical plans may be considered qualified expenses
from HSA accounts. Examples include expenses for dental, vision, alternative medicines,
etc.
Determining
whether HSAs are right for you will, more or less, depend on what your
comfort levels are in regards to health insurance. You have to be willing to have
a low-cost, high deductible, and potentially, a high out-of-pocket maximum medical
plan to be eligible. Some people prefer to pay a little more for health insurance
to have the lower deductible as a safety net, so again, it is about personal preference. For more information regarding this topic, please contact The Henssler Financial Group at 770-429-9166 or comments@henssler.com.
All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. |
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©2008 The Henssler Financial Group | www.henssler.com
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