Health Savings Accounts have been called the medical IRA because they offer tax advantages on contributions, interest and qualified withdrawals. They work in conjunction with high deductible health insurance plans. The high deductible means lower monthly premiums for the consumer. The money saved in premiums might be put in the Health Savings Account. If during the year you incur medical expenses you can pull the money from the HSA to help pay for qualified medical expenses tax-free. Funds not used in the HSA account accrue interest tax-deferred.
The amount contributed to the HSA is subject to annual contribution limits.
For 2017 the limitations are: 2017 HSA Minimums and Maximums
These contributions are 100% tax deductible from gross income.
BENEFITS OF HSA:
- Premium savings and tax advantages.
- HSA contributions could be tax deductible.
- Interest gained is tax-deferred.
- Withdrawals for qualified medical expenses are tax-free.
- Funds can be used to pay for qualified medical expenses that go toward annual deductible or expenses not covered by the plan.
- Subscribers might be able to contribute up to 100% of their annual plan deductible to their HSA.
- High deductible plan means lower monthly premiums and not paying for benefits not used.
- Funds in the HSA can be used to cover expenses if need, if that money is not used it stays put and earns interest toward your retirement.
For more information on Health Savings Accounts, please visit the Department of the Treasury’s Website.