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| Health Savings Accounts Are a New Option |
August 12, 2004 |
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 The Medicare legislation signed into law by President Bush created a new way to pay for healthcare costs, and the option is available to most Americans. A Health Savings Account is an individual account available to people with high deductible health plans (HDHP). Withdrawals for medical expenses are tax-free from these accounts. Individuals, self-employed, employers (of all sizes of businesses), unions, federal employees, and state employees are all eligible to establish an HSA. With an HSA, you or your employer send part of the money to the insurance company for the insurance policy and the rest goes into your tax-free account. The HSA can then be used to pay for routine medical care and the insurance policy covers the big bills.
Who is eligible for Health Savings Account?
Covered by a high deductible plan
Not covered by other health insurance
Not enrolled in Medicare
Cannot be claimed as a dependent on someone else’s tax return
No income limits on who may contribute to an HSA
No requirement of having earned income to contribute to an HSA Contributions to and HSA may be made by you, your employer or by a third party. Contributions made by the employer are not taxable to you, those you make are "above-the-line" deduction, and contributions made by a third party can also be deducted. Whoever makes the contributions, you own the account.  Even if you change jobs, the HSA and the funds in it remain yours. You can decide how much to contribute, how much to use for medical expenses, which expenses to pay, which company will hold the account, and how the account is invested. Just like an IRA, your HSA can grow through investment earnings. They have the same investment options and limitations as IRAs. The maximum that you can contribute each year is the amount of your High Deductible Health Plan`s deductible or $2,600 dollars for an individual and $5,150 for a family.
What are the advantages to an HSA?Save money on health insurance.
Choice of doctors
Choice of hospitals
Restoring the doctor/patient relationship
Tax benefits
Keeping the money that is not spent.
100% ownership from first day
Saving money for future health care bills  In order to contribute to an HSA, you must have a high deductible health plan (HDHP). This type of insurance plan has a lower monthly payment. It must have a deductible of no less than $1,000 for an individual and $2,000 for a family. The annual out of pocket expenditures, including deductibles and co-pays, cannot exceed $5,000 for individuals and $10,000 for families. The plan must also apply costs of prescription drugs to the annual deductible. Plans can have first dollar care (no deductible) for preventive care such as periodic health evaluations, screening services, routine pre-natal and well-child care, child and adult immunizations and other such treatments.
Rep. Wilson recently cosponsored seminars on these HSAs for the Albuquerque community, and 140 people showed up to learn more about how these work. |
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