It's not too late for a 2008 Health Savings Account

Health Savings Accounts, aka HSA Plans for Individuals and Employee Groups

HSA Accounts or HSA plans allow you to save money to pay for future medical expenses on an income tax-free basis. Any individual, who has an approved High Deductible Health Plan (HDHP) and who is not covered under another disqualifying health plan, can participate in an HSA. An employer can also offer Health Savings Accounts to his employees and both the employer and employees are allowed to contribute funds to the HSA. If offered in conjunction with a qualified Flexible Spending Account (FSA) commonly referred to as a cafeteria plan, savings in FICA and FUTA taxes as well as income taxes can be achieved.

An Insurance Policy and a Special Savings Account

An Health Savings Account is really a combination of a health insurance policy meeting minimum US Treasury policy design requirements called a High Deductible Health Plan (HDHP) and a separate custodial savings account for future medical expenses called a Health Savings Account (HSA). Congress created the HSA as a way to cover your future medical expenses, and it is subject to IRS regulations and guidelines. A health insurance company or an insurance plan usually provides the qualified health insurance policy. A licensed HSA administrator and financial services company, such as a bank, usually acts as the custodian and administers the savings account portion of the HSA.

The Health Insurance Plan Must Meet Certain Design Requirements

A qualified HSA plan has a single deductible that applies to all medical expenses covered by the insurance policy whether you are insuring yourself or an entire family. This deductible must be satisfied each year before the insurance company pays on any medical claims. The single deductible for an individual must be a minimum of $1,100 and can be any deductible up to the maximum out-of-pocket limit of $5,500 (if the plan pays at the 100% level after the deductible) and the single deductible for a family must be at least $2,200 up to the maximum out-of-pocket limit of $11,200 (if the plan pays at the 100% level after the deductible) for the year 2008 Preventive care can be provided without having to meet the deductible first. The limits on maximum out-of-pocket expenses include both the deductible and any shared expenses you are obligated for. These limits are subject to annual cost-of-living adjustments determined by the IRS, which will cause these values to change over time. You can exceed the out-of-pocket limits if you go outside the provider network on a preferred provider plan. The plan still qualifies.

Yearly Savings Allowed in HSA Accounts Based on Annual Limit and Age - New for 2008

You can save up to the maximum contribution limit of $2,900 for an individual HSA and $5,800 for a family HSA regardless of the HDHP deductible for 2008. These limits are also subject to annual cost-of-living adjustments. Amounts are no longer pro-rated if you start the plan mid-year. You can now make the full year's contribution even if you start as late as December. Individuals age 55 to age 65 can contribute an additional $900 over the above limits in 2008. Affordable Health Insurance Solutions are always available at QuoteBroker Free instant quotes, comparisons and online applications. All major companies available to compete for your business.

Consult your tax advisor for further information concerning plan deductibility.

Why you need a Health Savings Account

A Health Savings Account (HSA) is an account that you can put money into to save for future medical expenses. There are a number of advantages to funding these accounts, including;

Lower medical premiums: As HSA accounts have a higher deductible, you should be able to reduce your premium costs.

Tax savings: An HSA provides three tax advantages. 1) tax deductions when you contribute to tyhe account 2) tax free accumulations through investments 3) tax free withdrawls for qualified medical expenses.

You maintain control: 1) how much money you deposit into the account 2) choose to pay for current or future medical expenses 3) which company will hold the account 4) select what investments the account will hold.

HSA's are portable: If you change jobs, become unemployed, move cities or get divorced, your HSA account follows you. Health Savings accounts are a great way to pay for "qualified medical expenses", permitted under the tax code. These include most medical care and services, dental and vision care and most over the counter drugs.

In 2008 you can contribute up to $2900 (single) and $5800 (family) Individuals over age 55 can contribute an additional $900. For more information, contact Quotebroker or your tax professional.

Health Savings Accounts - What you can & can't do with the money

Health Savings Accounts (HSA) are on the rise again. More companies are also allowing their employees to participate in HSA’s. To understand HSA’s and how they work, we recommend reviewing that information online. The purpose of this article is to explain what you can do with the money in your Health Savings Account..

You can make a contribution into your HSA each year that you are eligible. For 2008, you can contribute up to $2900 for single coverage and $5800 if you elect family coverage.Individuals over age 55 can make an additional contribution of $900. These amounts are adjusted annually for inflation.

Your HSA account is usually through a bank, credit union or financial services company. The money within your account can be invested and grow tax deferred.

You can use the money within your account to pay for any “Qualified Medical Expenses” permitted under the federal tax code.The most common being; most medical care and services, dental and vision, and medications, including over the counter drugs such as aspirin. Your HSA most likely has a Debit Card to use for these expenses.

Most people do not understand that you can NOT use this money to pay for your health insurance premiums. There are a few “special circumstances”, that allow you to pay premiums, including periods of when receiving unemployment benefits, COBRA continuation and when paying for certain Medicare expenses. The most overlooked deduction is Long Term Care Premiums. This is permited if the LTC plan is "qualified". Always look for a “qualified” Long Term Care policy.

This money can be used to pay for your medical expenses and all expenses incurred by your dependent children or spouse.

There are penalties for using funds for any other expenses that are not considered “qualified”. For example you can not use the money for Cosmetic Surgery, paying for Supplemental Medicare premiums or other non medical expenses.To learn more about the Health Savings Accounts and how they work, visit the QuoteBroker website.

This information was intended to be educational and you should always consult your insurance, tax or legal representative to discuss how an HSA applies to your situation. Additional information can be located at the Department of Treasury website.