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HSA
Overview
HSA stands
for Health Saving Account.
Congress approved
HSA’s on December 8, 2003 as a tool for individuals
and small businesses to help control health insurance costs.
According to Bush “A health savings account is a good
deal, and all Americans should consider it ...These accounts
will be good for individuals, small business owners and
employees ...This will help more American families get the
health care they need at the price they can afford.”
An HSA is a tax-exempt account established to paying medical
expenses and save for retirement. Basically, you can think
of them as sort of an IRA that you can also use for medical
bills. Individuals or small businesses with HSA’s
can invest money tax-free and withdraw it without penalties
to pay for medical expenses. Any money/interest that you
do not spend on medical bills becomes yours when the policy
matures.
For HSA FAQs
click here |
Who
Qualifies for an HSA?
Any
individual with specific high-deductible health plan offered
by Blue Cross, Blue Shield etc. can qualify for an HSA.
If you would like to know if a plan you currently have
or are considering is HSA eligible, contact us at 888
285 6334. Our California health insurance licensed agents
will help you find the right plan.
How
Does an HSA save money?
High deductible
plans usually have a lower monthly premium. If you purchase
a high deductible HSA plan, you will save money every month with
a lower monthly premium. If you invest the money that you
saved in a tax free account, that money earns interest
on your behalf. If you never have any medical expenses
(like paying a deductible for an operation) you get to
keep all that money when it matures. If you need money
for medical expenses like office visit co-pays, you can
draw upon your HSA with no penalty.
See
insert to the left for an illustration.
How
do I learn more?
Call us at 888 285 MEDI or click here to read our HSA
frequently asked questions.
2006
HSA Limits
Individuals Families
| Maximum
Contribution |
$2,700
|
$5,450
|
| Minimum
Deductible |
$1,050
|
$2,100
|
| Out-of-Pocket
Maximum |
$5,250
|
$10,500
|
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Let’s take
two California families that both have incomes of $65,000 a year.
Family
1 pays $740 monthly in health insurance but has
a low $500 deductible.
Family
2 has an HSA eligible plan with a $320 monthly premium
and a $5,000 deductible. Family 2 saves $420 per month on
premiums, or $5,040 a year.
If family 2 puts
$5,000 into a tax-free HSA. Their $5,000 contribution is
not taxed so their tax savings is $1,700. Each year, they
spend $1,500 on doctor visits and other qualified medical
expenses. If the $3,500 they save in the account each year
grows at 4 percent annually for 30 years, the family will
have accumulated over $200,000 when they retire.
Not bad. |
