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The ABCs of HSAs (Health Savings Accounts)

The following information is offered by eKaiserInsurance as a basic introduction to a tax-preferred program that anyone with insurance (and especially anyone planning to buy insurance) should be aware of. Additional information provided by the Department of Treasury can be found at www.treas.gov/offices/public-affairs/hsa/about.shtml.

HSA- Health Savings Account:

Pay less in insurance premiums, access high quality health care, reduce your taxes, and save for your future!!

Simply put, an HSA is a tax-advantaged savings account opened at any bank or authorized financial institution. An HSA is owned by an individual to pay for current and future medical expenses. To open an HSA, you must be enrolled on a qualified high deductible health plans (HDHP) which will generate a lower monthly premium compared to most rich benefit health plans. The concept is, now that your premiums are lower each month, make a tax deductible contribution to your HSA that can be used for medical expenses or earn interest tax-free until you retire.

You are in control of your HSA. You may fund the account all at once, monthly, or as you need. If you do not use the money that year, it simply rolls over. You will have a debit card attached to your HSA, making paying for medical expenses quick and easy.

HSA contributions can be made by an individual, employer, or both. Contributions can also be made by others on the behalf of an individual and deducted by the individual.

Tax advantages:

  • pay for qualified medical expenses tax-free                                                                                      
  • contributions are tax-deductible
  • interest and investment earnings are tax-free

Maximum contribution limits:

2017- $3000 individual, $5950 family
2017- $3050 individual, $6150 family

For individuals age 55 and older, you may contribute addition “catch up” contributions up to $1000.

Frequently Asked Questions:

What are qualified medical expenses?

All medical, dental, and vision expenses, as well as chiropractic visits and acupuncture. Click here for a complete list of eligible expenses.

What happens to an HSA if I am no longer on my HSA qualified health plan?

You will no longer be eligible to contribute to your HSA, although you still have access to the HSA and can use the funds for eligible expenses tax-free.

Do I lose contributions if I do not use?

No, the money in your HSA and your investment earnings carry over year-to-year –tax-free.

What happens to my HSA if I die?

Your beneficiary will have access to the HAS for qualified expenses. If funds were used for non-qualified expenses, the beneficiary would pay the income tax.

Are there fees for having an HSA?

There are no set up or transaction fees, although there is a low monthly administration fee. (i.e. $4.25 for a Wells Fargo HSA)

Can I use the funds for non-qualified expenses?

Yes, but you must pay income tax and 10% tax penalty on the amount of the non-qualified expense. This 10% does not apply to distributions made after you reach age 65.

If you have additional questions, feel free to call us at 800-915-0501.

While the concept is fairly easy to grasp, deciding whether an HSA is for you and your family depends on your unique subset of circumstances (age, relative health, location, employer participation, and of course financial means) To aid you in the consideration process, our company offers online quote resourcing (http://www.ekaiserinsurance.com/zipcode.asp?d=quote as well as personal, no obligation telephone counseling at 1-800-915-0501. Since we are cross trained in financial and tax planning as well as insurance brokerage, we can quickly and accurately evaluate your precise circumstances and see if you fall into the group of millions of Americans who will be ©Saving for a Healthy Future© with HSAs. Call us today.

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Stephen Masula, CFP, EA. - License Number: 0589948
1 (800) 915-0501 - info@eKaiserInsurance.com