Health Savings Acounts - What You Should Know!


Keith Thompson


Maybe it took the State of The Union address from President
Bush to bring the concept of Health Savings Accounts out
into the open for all to see. Whatever the case, this is an
idea and reality that is long overdue and a great solution
to health insurance for many people. Health savings
accounts, coupled with a companion low-cost high-deductible
health care insurance plan, will take the bite out of
monthly health care costs for many consumers, and provide a
powerful savings component at the same time. Let's look at
the details.

While Congress passed the legislation creating Health
Savings Accounts in 2003, it has taken a while for the word
to get out. In a nutshell, the deal is as follows: Health
savings accounts are tax-free savings accounts, which are
necessarily paired with a high-deductible insurance policy
for catastrophic medical expenses. You are able to put as
much as $5150 (family) or $2600 (individual) annually into
these accounts, which are in turn used to cover normal and
customary medical expenses, like doctor's visits, routine
checkups, etc. Some of the neat things about these accounts,
besides the tax-free part, are that you may carry over
unspent money from year to year, and it does not matter
where you work or for whom. They are completely portable.
Also in most cases, it's very possible to realize large
savings on your yearly insurance and medical expenditures.
When you are in charge of how much you spend and where, the
possibilities are eye-opening. Plus, you are not tied to any
plan's particular doctor or medical group: you are free to
choose whoever you want. Health savings accounts, when set
up properly, can not only save you lots of meony, but also
cannot be cancelled except by you.

Another enticing option regarding health savings account is
the savings aspect. If you have a traditional IRA or 401(k)
you get a deduction for all contribututions made yearly, but
after age 65 all distributions are taxed at both the federal
and state level, including capital gains. (Roth IRA's don't
apply) With a Health savings account you get the same
benefits as with IRA's and 401(k)'s, with the major
difference being that monies withdrawn for qualified medical
expenses are NEVER taxed! Also, with health savings accounts
there is no age restriction on when you may withdraw funds
like there are with the others. As far as using these funds
for retirement purposes, health savings accounts are able to
be withdrawn after age 65 for any purpose, without penalty,
though in this case you would pay income taxes. This looks
even better when you realize that account appreciation on
health savings acounts is tax-free, and look even better for
those who are self-employed, who may write off 100% of
health care premiums. So in effect, you are buying a high-
deductible insurance plan, paying the premiums from your
business, and savings oodles of cash tax-free in your Health
savings account. Of course, should you become sick, you'll
not only have the ability to pay for your care, a major
illness won't be the family-finance disaster it often is
these days. More than 1 million Americans each year end up
in medical bankruptcy becasue of inadequate coverage. Don't
let this happen to you!

Health Savings Accounts are a train long overdue finally
arriving at the station. Make sure to climb onboard!


Keith Thompson is the webmaster at
For more information on health savings accounts visit Win.ter Pa.rk today!




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