Most atimes people tend to be stranded when they are sick because of lack of money. But what they don’t know is that they can be saving money for their health, so that when they are sick all of a sudden they can get treatment. The only way to save money is by having a Health savings account.
A Health Savings Account (HSA) is like a personal savings account, is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. It can only be used for qualified healthcare expenses. To be eligible, you must be enrolled in a High-Deductible Health Plan (HDHP). Health Savings Accounts also have some important tax advantages.
By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums. You may contribute to an HSA only if you have a High Deductible Health Plan (HDHP) generally a health plan (including a Marketplace plan) that only covers preventive services before the deductible.
For plan year 2019, the minimum deductible is $1,350 for an individual and $2,700 for a family. For plan year 2020, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family. When you view plans in the Marketplace, you can see if they’re “HSA-eligible.”
Advantages of an Health Savings Account
- If you do not use the money in your HSA, it carries over for the next year, you do not lose your savings. Imagine how these amounts can easily build up to thousands of dollars for you in a short time, tax free, if you do not need to use it for medical emergencies.
- You can put money into your HSA before it is taxed. This means you can put up to the specified limit aside in your health savings account, tax-free.
- Interest gained on your money in an HSA is also tax free.
- Another benefit of HSA’s are that if you reach the age of 65, and have been lucky enough to not use all the money left in the Health Savings Account, you may be able to use it tax-free in retirement. This is huge because it is like a second retirement fund, that saved you money on health care plans along the way.
- If you end up deducting money from your HSA for medical expenses, you may even qualify for higher tax deductions on medical claims depending on varying circumstances.
Where to Go to Set Up a Health Savings Account
Starting a Health Savings Account is not difficult. You can set up your account with:
- Insurance Companies
- Brokers and financial advisors
- Credit Unions
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