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Health Savings Accounts

Date Added: July 06, 2008 07:41:37 PM
Category: Financial: Banking: Health Savings Account

Health Savings Accounts
By Mac Caldwell

It is estimated that about 6 million people are currently using Health Savings Accounts (HSA) but by 2010 that number will increase to approximately 25-30 million. Some insurance companies have ignored the new legislation which allows families to redirect some of the money they have been paying in taxes and social security to help pay family health expenses.

To begin with you will have a qualified high deductible health plan and then a Health Savings Account which works like an IRA but can be used to pay health care costs. High deductible plans are less expensive than the traditional low deductible plans. The savings between the two can be placed in a tax-deductible savings account which may be used for qualified health care costs plus you may contribute to that account based on limits set forth by the IRS. The money deposited, as well as the earnings, are not taxable. Funds withdrawn for qualified expenses are not subject to any penalties and unused balances in your account continues to roll over and any interest earned is tax deferred. There is no "use it or lose it" situation.

By using a high deductible health plan, small claims are eliminated thus allowing the companies to pass along lower premium rates due to less paper work, fewer checks being written,etc. It is always wise to have a small emergency fund set up to allow for unexpected health needs. Another good aspect is that in your savings account, your funds normally achieve a higher rate of interest than they would in a normal savings account at your local bank.

Does your current health plan cover chiropractic care? Birth control pills? Dental treatment? Eyeglasses/contact lens? With your Health Savings Account these are just a few of the eligible expenses and may be paid form your HSA.

So your probably wondering, what is an ineligible expense? To name a few: athletic club memberships, special foods or beverages, stop-smoking programs, weight-loss programs, and several others. A full list of both acceptable and unacceptable expenses can be provided.

Simply put, Health Savings Accounts (HSA) combine exceptional coverage with the opportunity to reduce your Federal Income Tax, all at the same time.

Mac Caldwell is an independent insurance agent in Tennessee. Being a cancer survivor, Mac realizes the importance of having quality Health Insurance. Mac is also dedicated to assisting other people in their decisions regarding Health Insurance.

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