A Quick Overview On Health Savings Accounts Or HSA
Health Savings Account or HSA is an account with tax-exempt and custodial features. It covers a beneficiary’s medical, vision and dental expenses. The account holder owns and has control over the HSA plan with a debit card provided to swipe when paying for medical expenses.HSA is somewhat similar to an IRA but is solely focused on the medical aspect.
You must be enrolled in a HDHP (High Deductible Health Plan) to open a HSA account, providing that you are not covered by any other non-high deductible plans, not covered by Medicare, and not a dependent in someone else’s tax return. If you are worried about the tie ups that comes with the HSA, don’t. HDHP accounts are cheaper than your regular healthcare plan because it has high deductibles. The money that is saved on premiums every month can be transferred to HSA instead. The HDHP plan is accessible to anyone the age of 65 years and below, for individual or group, or no matter the size is.
Back on 2009, the HDHP plan offers a rate of $1.150 on annual deductibles for individual accounts and for family is $2,300. The maximum amount of contribution varies if it’s for individual or family plans including deductibles. It’s $5,800 for the individual plan and $11,600 for family or group.
Not all qualified high deductible plan can qualify you to avail of the HSA plan. The policy of the high deductible plan you are under must meet the specific of the U.S. Congress.
There are nine benefits that the HSA plan can offer its account holder:
1. Lower premiums on healthcare plans compared with standard health insurance plans.
2. Both the employer and the employee can make the contribution. The employees no longer have to wait for their bosses to the payments and do it themselves.
3. The account holder owns the funds on the HSA and can choose how to invest them.
4. Account holders can deduct contributions on their tax returns if items are not deducted.
5. HSA earnings are not taxable according to the Federal Law.
6. Tax-free withdrawals on certified medical expenses.
7. HDHP provides coverage on catastrophic protection.
8. HSA funds if not used for medical expenses, can be rolled over and used by the owner.
9. HSA plans allow holders to choose their own physicians.
Using the HSA funds on non-medical related expenses can incur a tax penalty of 10%. You need to reach 65 years old to use the funds for non-medical purposes. Only income tax for the withdrawals shall be applied.
Is it better than your traditional health insurance plan? The HAS plan certainly makes the standard healthcare plan look like sweepstakes—buying a ticket and crossing your fingers to win, it’s unsure. In the HSA plan however, you can combine it with a qualified insurance plan and take the savings from lower premium cost to your HSA for easier accessibility on your funds in cases of emergencies and not wait on line or wait for proper documents to be approved to get reimbursement.