Healthcare and the Family Budget - What is a Health Savings Account and Do You Need It?

Healthy children are easier on the household budget401(k). Keep in mind that you can continue to
unfortunately not everyone is so blessed so what dowithdraw money from the account tax-free for
you do? When considering the family budget andqualified medical expenses after age 65. You can't
being a good parent, providing quality healthcare at amake new HSA contributions after age 65, but you
reasonable price is right up there with the mortgagecan still use the money in your account tax-free for
payment, car payments and college tuition.medical expenses at any age.
Health Savings Accounts can be simple and easy toDeposits to an HSA may be made by any
understand. A Health Savings Account is apolicyholder of a qualified High Deductible Health Plan
tax-favored savings account combined with a(HDHP), by an employer on behalf of a policyholder,
qualifying high-deductible health insurance plan. Healthor any other person. Previously, the annual maximum
Savings Accounts allow you to legally avoid federaldeposit to an HSA was the lesser of the HDHP
income tax by depositing 100% of the health plan'sdeductible or specified IRS limits. As of 2007 plan
deductible, up to $2,850 for singles or $5,650 foryears, Congress has abolished the lower limit based
families, into your Health Savings Account. Healthon the deductible, and the maximum contribution will
Savings Accounts, (HSA) touted as a way to lowersimply be the statutory limit. These include
health-insurance costs and broaden coverage, havedeductibles and coinsurance as well as many other
fallen short of their promise. They are gainingexpenses not covered under medical plans, such as
popularity because they allow individuals, rather thandental, vision and chiropractic care; durable medical
an HMO or the government, to take charge of theirequipment such as eyeglasses and hearing aids;
health care. Also, they're an excellent option forpurchase and use of qualifying over-the-counter
individuals and families without employer-sponsoredmedications; and transportation expenses related to
health insurance. Health Savings Accounts aremedical care. Contributions are deductible, the
becoming quite popular for people who are generallyaccount accumulates tax-free, and withdrawals used
healthy and they're leading the way in this transition.for medical expenses are tax-free. Contributions and
Savings can be used to help pay the deductible andgains can be rolled from year to year - there's no
for non-covered medical expenses, such as dental"use it or lose it". Contributions to the HSAs are
and vision. Savings reduce or eliminate annualtax-deductible at the federal and state level.
out-of-pocket exposure. Savings not spent remain inHealthcare is the number one issue facing many
the HSA tax-deferred. Savings and investments unlikeindividuals and companies in America. Now with the
premiums, unused HSA dollars remain in the HSA untilrelease of Michael Moore's new movie, SICKO, the
you use them later. Day-to-day expenses come outdebate on healthcare in the USA in on. Many
of the health savings account, while catastrophicwell-meaning people believe that a government
expenses are covered by insurance. Health Savingstake-over of healthcare coverage, called a
Accounts are gaining popularity because they allow"single-payer" system, is the answer. Health Savings
individuals, rather than an HMO or the government, toAccounts are combined with a High Deductible Health
take charge of their health care. A Health SavingsPlan (HDHP) to offer a more affordable approach to
Account combined with a High Deductible Healthhealthcare. They were created to help give control
Insurance Plan gives individuals an economic incentiveback to consumers and lower healthcare costs. While
to become better consumers of health care servicesmost healthcare insurance clients say they are
because they are now spending their own money upsatisfied with their current plans, the landscape
to the level of their high deductible. Health Savingschanges when major illnesses start. Alternatively,
Accounts are an excellent option for individuals andyour HSA balance can be used to cover your
families without employer-sponsored health insurance.post-age-65 healthcare costs including Medicare Part
If your employer offers a high-deductible healthA and B premiums, Medicare HMO premiums,
insurance policy, you may be able to make pretaxgarden-variety health premiums, insurance deductibles
contributions, like you would with a flexible-spendingand co-payments, prescriptions, long-term care
account. Legislation passed by Congress December 9,insurance premiums, and so forth. But what about
2006, will let you make a one-time transfer of fundsthe person who lives pay check to pay check or the
tax free from a flexible-spending account to an HSA.single parent trying to provide healthcare for
You cannot have an HSA if you use athemselves and children. Combine a tax-favored
flexible-spending account to pay health-care costs orHealth Savings Account (HSA) and an HSA-eligible
if you have other medical coverage (say, through ahealth insurance plan to save money tax-free for
spouse's policy). You can keep the money in an HSAhealthcare costs.
account even after you leave that job, similar to a