Health Savings Accounts Can Save You Money
In these down economic times, every little tiny bit of savings helps especially if you can save on health or medical expenses. Health Savings Accounts or HSAs can help you save money on out of the pocket health care expenses by allowing a portion of your income to go untaxed by the government.
HSAs, introduced in 2003 as part of the Medicare improvement legislation signed by George Bush, anyone who is enrolled in a High Deductible Health Plan (HDHP), may put their funds into a Health Savings Accounts and are not subject to Federal Taxes and Medicare taxes . For 2010, singles may contribute up to $ 3,000 to their accounts while whole families can add up to $ 5950. The contribution to the HSA are not subject to the federal or Medicare tax which is approximately 7%, that can amount to real savings.
The fund can be used to cover out of pocket expenses like expensive co-pays as well as any non-covered medical expenses. Even over-the-counter medications like aspirin or cough medicine. Any funds added to the account will be allowed to rollover any unused funds to the next year. There are some negatives to the HSA which, like IRAs, you can withdraw money from the HSAs, but you will be subjected to a penalty for that withdrawal.
The verdict of HSAs is not in yet so do reasonable additional research to see if this financial instrument right for you. Your employer's human resource department should be able to pass along additional information.