Health
Savings Account (HSA)
What
is a Health Savings Account (HSA)?
An HSA is a tax-advantaged savings account
tied to a high deductible health insurance plan. This
savings account may be used to pay for deductibles,
co-insurance and other qualified healthcare expenses
on a tax-free basis. This account in very
unique because it offers a unique advantage
over every other type of retirement account. Most retirement
accounts offer either immediate tax deductions or future
tax exemptions on earnings. The HSA offers BOTH
tax-deduction and tax-exemptions!
Unlike
other types of health savings vehicles, HSA contributions
and earnings carry over from year to year allowing you
to build up your savings over time. If not used by age
65 you may also use the funds in your HSA to supplement
your retirement income. Also, unlike most other
employer sponsored savings plans, HSA's are portable
and remain with you regardless of your employment status.
You control your
money. Isn't that how it ought to be!
We recommend you open a self-directed HSA and use it
the same way we recommend you use your 401(k) or IRA...
invest in real estate and private
mortgages!
Why
Should I Open an HSA?
If
you want to take control of your health care costs—avoiding
high premiums and complicated health plans—then
an HSA could be the right plan for you. With a well
planned self-directed HSA you can easily lower
health-care premium costs in
some cases by as much as 70%. Your contributions are
tax deductible (subject to some limitations). Contributions
can be invested (similar to a self-directed IRA) —
funds can be invested in the same way as a self-directed
IRA, with the possibility of accumulating tax-free or
tax-deferred profits in investments that you know best.
Assets are never taxed if they're used for qualifying
medical expenses. Contributions can be carried over
from one tax year to the next—forget about the
"use it or lose it" requirement imposed upon
flexible spending accounts. Plus, when money is withdrawn
to pay for qualified medical expenses, the distribution
is tax free.
Eligibility
In order to be eligible to set up an HSA,
an individual must first be covered under a high-deductible
health plan (HDHP). Furthermore, the individual is generally
prohibited from possessing other types of health insurance
coverage unless such coverage is considered disregarded
coverage. Disregarded coverage includes insurance related
to accident, disability, vision, dental care or long-term
care and also includes insurance providing coverage
regarding a special disease or illness or insurance
paying a fixed amount per day for hospitalization coverage.
In addition, an individual is not an eligible individual
for purposes of an HSA with respect to any month during
which the individual is enrolled in Medicare Part D
or in any other Medicare benefit program.
It
is important to note that an HDHP can offer either self-only
or family coverage. For 2008 an HDHP is a health insurance
plan with a minimum deductible of $1,100 for self-only
coverage or $2,200 for family coverage. Annual out-of-pocket
expenses, including deductibles, cannot exceed $5,600
for self-only coverage or $11,200 for family coverage.
For
2009 an HDHP is a health insurance plan with a minimum
deductible of $1,150 for self-only coverage or $2,300
for family coverage. Annual out-of-pocket expenses,
including deductibles, cannot exceed $5,800 for self-only
coverage or $11,600 for family coverage. It is also
important to note that an HDHP can impose higher out-of-pocket
expenses (co-pays and co-insurance) for any services
provided by non-network providers.
What
about Self-directed HSA accounts?
YES they do exist and yes you can open today... and
YES you should open one!
DISCLAIMER:
WN Funding or its affiliates hold
no licenses for financial planning and WN Funding is
not a registered security with the Securities &
Exchange Commission.
None of the information on this website should be
viewed as tax or legal advice. Please be sure to consult
your attorney, accountant, and/or other licensed professional
needed before considering any investment or conversion.
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