Congratulations! Pat yourself on the back for wisely
choosing to open a self-directed health savings account, or
HSA, as a means to augment your low-premium high deductible
health insurance. Planning ahead by establishing a savings
and investment plan for the money you set aside for health
care each year definitely has its advantages—as long
as you know how best to work your HSA benefits to your
advantage, both now and in the future.
Established in 2003, HSA is the new kid on the block to the
financial planning scene, and has been extremely popular
with those who want to invest their money with an eye
toward affordable health care. A self directed health
savings account is an interest bearing account that may be
tapped now or later to pay for medical expenses. Interest
on an HSA account is compounded daily and credited monthly.
One distinct advantage to an HSA is that it places you in
control of the account; decisions on how to spend money in
your account are made by you without having to ask the
permission of your insurance company or a third party. You
may also decide what types of investments you would like to
make with the money in your account to help it grow.
The only requirement for establishing an HSA is that you
purchase a low-premium high deductible health plan (HDHP).
An HDHP, also known as a catastrophic health insurance
plan, is typically an inexpensive health insurance policy
that does not cover the first several thousand dollars of
health care expenses, but offers coverage once the
deductible has been met.
You may create your HSA through your bank, credit union,
insurance company, or any of a number of approved
companies, and it is also possible that your employer may
have set up an HSA as part of his or her employee package.
Generally, HSA policyholders have access to 24-hour
customer service and online enrollment. And usually, for a
nominal annual fee, the package includes a debit card and
unlimited check writing, as well as online access to
account information. You may authorize your medical service
provider or another person to initiate an electronic
withdrawal from your account, and you may also purchase
goods and services at medical service provider locations
that accept signature-based debit cards on their premises.
According to the U.S. Department of the Treasury, a HSA
offers distinct tax advantages. Contributions may be made
by the individual or as a family, even if you do not
itemize deductions. Also, an individual's employer may make
contributions that are not taxed to either the employer or
the employee, and employers sponsoring cafeteria plans may
allow employees to contribute untaxed salary through salary
reduction.
Distributed funds from your HSA are not taxed if used to
pay for qualified medical expenses. And, unlike funds
relegated to Flexible Spending Arrangements, funds in your
HSA account are not forfeited if not used by the end of the
year. Instead, your unused funds roll over to the next year
and remain available for your use in later years.
Sources:
www.ustreas.gov/offices/public-affairs/hsa/about.shtml
https://secure.mvnt4.com/harris/pdf/hsadisclosure.pdf
www.heartland.org/Article.cfm?artId=23034
----------------------------------------------------
US Insurance Online CEO Jim Waltrip is a self-taught
software developer and entrepreneur with a passion for
building things: teams of employees, software, and new
systems. Jim started US Insurance Online with business
partner Ryan Patterson in May 2005. Visit
http://www.USInsuranceOnline.com for insurance shopping
help and for free insurance quotes.
No comments:
Post a Comment