Health Savings Accounts
A Health Savings Account (HSA) is a type of personal savings account you can set up to pay certain health care costs. An HSA allows you to put money away and withdraw it tax free, as long as you use it for qualified medical expenses, like deductibles, copayments, coinsurance, and more. You’re eligible to contribute to an HSA when you’re covered by certain high deductible health plans (HDHPs). With HDHPs, the monthly premium is usually lower, but you pay more health care costs yourself before your insurance company starts to pay its share. You can’t contribute to an HSA if you have Medicare coverage, or a plan that pays its share of a covered service without you having to pay deductibles or copayments first (called "first dollar coverage").
Banks, insurance companies, and other financial institutions offer HSAs. The money you contribute to the account isn’t taxed as long as it’s used for qualified, out-of-pocket medical costs, like:• Acupuncture• Ambulance costs• Doctor visits• Hearing aids• Prescription drugs• Psychological therapy/psychiatric care• Qualified long-term care services
Sometimes, you can spend the money on similar medical costs for your spouse or dependents, and your money rolls over year-to-year if you don’t spend it.
Generally, HSA-eligible plans are available through the Health Insurance Marketplace®, Small Business Health Options Program (SHOP), or outside of the Marketplace. HSA-eligible plans are also available in most states that use HealthCare.gov. You can find out if your state has HSA-eligible plans when you preview plans with price estimates at HealthCare.gov/see-plans, or when you apply for health coverage.
There are other tax-cutting strategies in addition to those mentioned here. If you would like assistance in selecting tax-saving strategies that make the most sense in your situation, contact us today!
For the original article, please go to: Centers for Medicare & Medicaid Servics Marketplace