A Health Savings Account, or HSA combines high deductible health insurance with a tax-favored savings account, similar to a 401(k). Money in the savings account helps pay the deductible. If the deductible is met, the insurance starts paying. Money left in the savings account earns interest and is yours to keep or spend on qualified medical expenses. There is no “use it or lose it” restriction with an HSA.
HSA savings can be used to pay for many types of medical expenses beyond what is covered by your insurance plan. These expenses include dental services, vision, alternative medicine, long-term care services, prescription drug and certain over-the-counter drugs.
Anyone who is not entitled to Medicare can accumulate tax-favored savings for healthcare needs. You must have a qualified high deductible plan to receive the benefits. The current minimum deductible amounts are $1,100 for a single and $2,200 for a family. HealthPlanOne clearly identifies plans that qualify for HSA tax savings accounts. Simply use our Refine Search tool to include only HSA’s.
Assume that you are a self-employed individual. You purchase an HSA policy and make a significant tax-free contribution. The resulting tax savings might pay for the health care premium!
It would work like this. You purchase an individual HSA policy with a $2,500 deductible for $1,400 per year. You then contribute the maximum $2,500 to your HSA account. The tax savings would be $1,380, very close to the cost of a high deductible medical policy:
|Annual Cost||Tax Bracket||Tax Savings|
Even if you incur $500 health care expenses for the year, you still will have paid for the cost of the policy with tax savings and have $2000 of your savings in an tax preferred, investment account.
The example assumes you have a combined federal and state tax rate of 30% and an additional self-employed payroll tax of 15%. Tax rates will differ based on your situation.
To find out which plans qualify for HSA treatment, simply search the plans and then use our Refine Search tool to include only HSA's