HSA Health Savings Accounts have two components: a lower cost, High Deductible health insurance product to cover your larger medical expenses, and a tax favored health savings account.
The money you save on premiums can be put into your tax favored savings account, and then withdrawn to help pay your deductible or pay for other qualified medical expenses. Living expenses -- after age 65 -- pay ordinary income taxes. Health premiums when you're between jobs.
You own your savings account. Your unspent health care savings roll over year after year. NEVER taxed when used for qualified medical expenses. Your investment is a gross income tax deduction each year. This will lower your yearly income and become a tax advantage for yourself.
You may even invest your money in a variety of mutual funds with the potential for even greater long-term growth (Minimum balance required). A bank account will be set up for paying medical expenses. A debit \ credit card will be given to you and with that you can pay expenses.
Any funds withdraw for non-qualified medical expenses will be taxed at your income tax rate plus 10% tax penalty.
Federal law states that annual contribution limits are $2,850 for singles/$5,650 for families for 2007.
Deposits are $25 minimum and set up on the same payment plan as premiums for the health insurance.
What expenses are qualified for reimbursement from my HSA? A list of these expenses is available on the IRS Web Site irs.gov . Defined by Section 213(d) of the Tax Code. HSA distributions used for any purpose other than the qualified medical expenses listed will be taxable, and the appropriate tax rules will apply.
Are lump-sum deposits permitted? Yes. However you must continue your $25 monthly minimum deposit. Lump-sum deposits should be sent directly to your HSA bank.
Article Directory : http://www.articlecube.com
Bryant Waldron is the owner of www.MyPlanFinder.com. Several years of experience in the insurance business.
