Heath Savings Accounts (HSAs) can only be set up in conjunction with a High Deductible Health Plan (HDHP) and are generally used to pay medical care deductibles and copays. But did you know that HSAs can also be used for other unreimbursed health care expenses? For example, HSA funds can be used for dental deductibles and copays, eyeglasses and contacts.
Here are some other advantages to maintaining an HSA.
Money contributed to an HSA and not used in a given year can roll over to the next year and continue to build up until needed to pay for qualified expenses.
HSAs offer tax advantages. Money put into an HSA is tax deductible or, if it is paid through payroll, it is tax deferred. The funds can grow tax free and withdrawals used for qualified expenses are not taxable.
HSA funds can be used to pay the premiums for Long Term Care coverage.
Accumulated HSA funds can provide a source of cash in retirement. A person past the age of 65 is not charged the 20% penalty tax which normally applies for using HSA funds for unqualified expenses. The withdrawal, however, would be taxed as regular income.
HDHPs generally have lower premiums than other health plans. Putting the money you would save by purchasing a HDHP into an HSA means you may have more control and flexibility over the money you spend on your health care.
Be sure to follow the federal guidelines to make sure that your withdrawals are qualified. To learn more about withdrawals, contribution limitations and other regulations, follow this link to IRS Publication 969 about HSAs http://www.irs.gov/publications/p969/index.html.
Pat Murphy is an experienced insurance professional who has been with Lawyers Insurance since 2005. You can read more about her background on her LinkedIn profile. Contact Pat at 800.662.8843 or email@example.com.
About the Author
Pat Murphy is an experienced insurance professional who has been with Lawyers Insurance since 2005. You can read more about her background on herLinkedInprofile. Contact Lawyers Insurance at 800.662.8843 for information regarding insurance quotes.