A Health Savings Account is an account that you are able to fund in order to save for future medical expenses. In order to qualify for a HSA, you must be enrolled in a high deductible health insurance plan. The idea behind a HSA plan is that you can use the money in the account to pay for “qualified” medical expenses including doctor visits, vision and dental care, and even over the counter medications. Once the deductible has been satisfied by medical expenses, typically all other medical expenses will be covered at 100% up to the lifetime maximum.

Advantages of HSAs:

Protection from financial ruin- the high deductible insurance plan limits one’s out of pocket exposure for high and unexpected medical bills.
• Tax Savings: HSA accounts provide you with triple tax saving:
  • Tax deductions for the money one contributes to a HSA
  • Tax-free withdrawals for qualified medical expenses
  • Tax-free earning on interest
• Save money on health insurance premiums. Switching to a plan with a slightly higher deductible is almost guaranteed to save you money.
• Your HSA is portable. So even if you change jobs or move, you always will be able to own your health insurance coverage and take it with you.
  HSA Contributions:
• For 2009, an individual can contribute up to $3,000 a year, and families can contribute $5,950 annually.
• Individuals over 55 years of age are able to make a “catch-up” contribution up to an additional $1,000 in the year 2009.

What happens if you use money in the HSA for expenses that are not medically qualified?

• Money used for purposes other than “qualified medical expenses” are taxable as income, and subject to a 10% tax penalty.
• After age 65, the 10% tax penalty is not applicable.

To find out if what Health Saving Accounts are available in your area, and whether or not they are right for you, speak with an Advisor at MyInsuranceExpert.com