Tax Free Health Savings Accounts
Have money to spend on health care even after you retire
Like flexible spending accounts (FSAs), these are tax-free accounts to pay for health-care costs not covered by insurance, such as doctor co-pays, vision and dental care, insurance deductibles and some nonprescription drugs. Unlike FSAs, however, the new accounts can be rolled over each year - something the government hopes you'll do, so you'll have money saved up to spend on health care when you retire.
- HSAs are "the better rainy day fund" approach to healthcare. Save money on health insurance, and medical expenses when they do occur.
- HSA contributions are from pre-tax dollars, and can be made by the company and/or the individual / employee.
- HSAs are controlled and owned by individuals / employees.
- HSAs accumulate from year to year (not use it or lose it), and are portable.
- HSA payout's for qualified medical expenses are tax-free.
- HSAs accumulated capital, interest and dividends are tax-free until retirement.
- HSAs are an inheritable asset.
What is a Health Savings Account (“HSA”)?
A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.
You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account.
You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow.
What Is a “High Deductible Health Plan” (HDHP)?
You must have an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses (i.e., your “deductible”) but will generally cover you after that . Of course, your HSA is available to help you pay for the expenses your plan does not cover.
How can I get a Health Savings Account?
Grage Financial Group can assist you in setting up a Health Savings Account. We can also work with employers/businesses to set up a plan for employees.
How much does an HSA cost?
An HSA is not something you purchase; it’s a savings account into which you can deposit money on a tax-preferred basis. The only product you purchase with an HSA is a High Deductible Health Plan, an inexpensive plan that will cover you should your medical expenses exceed the funds you have in your HSA.
Grage Financial Group can help you get started to achieve a successful Health Savings Account.
