What You Should Know About Has

The United States has been defined as a aging population and the need for good medical

care and the means to tap into it is in greater demand by the citizens. Many programs are implemented with this in mind. One of these programs is the HSA program or a Health Savings Account that is tax free, but only if it is used according to federal government set guidelines.

A HSA is not an insurance plan. It is a combination of two components. One of the parts is a HDHP, (high deductible health plan), and the other part of this plan is a savings account. Another feature is all of the money that is contributed to the plan is considered for what they refer to as an," above the line," deduction.

This deduction is simply a deduction that can be deducted before the adjusted gross income is calculated and is actually better than an itemized deduction. This type of account can also be used as a way to grow you money tax-free so long as the account is being used for medical cost, or when the person reaches the age of 65.

Flexible spending plans that many jobs have available to their employees, require the individual to deplete the funds within the current year; HSA accounts don't. This account plan is a great way to accumulate funds every year without penalty or tax. lf an individual is relatively healthy and continues that way the use for medical cost should be minimal making the funds available at age 65, that could be used for retirement purposes.

Here is how it works. The individual puts funds into the account, which are tax free when deposited. These funds will accumulate, year after year. If they are not used the individual owns them, and they can use them. However, they must be at the retirement age to take advantage of the funds. There is an additional benefit, to setting up a HSA. The individual and their doctor have control, over how their health care will be handled.

Something else to be aware is a HSA can be inherited. The individual who owns the HSA can appoint a beneficiary in the event that the person passes on. People who are self-employed gain a double benefit using a HSA. There is the self-employed health premium paid tax deduction and the HSA contribution tax deduction. Both of these are considered, "above the line," deductions and can be used simultaneously. The benefit to having a HSA outweighs the concerns a person may have about the high deductible health insurance plan. It is something to consider when doing any long term retirement planning.

by: Ethan Kalvin

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