Learn How to Beat the Health Savings Account Tax-Savings Deadline
Individuals and families must have their HSA-qualified health insurance coverage in force no later than December 1st in order to qualify for a current year tax-deductible contribution to a Health Savings Account. A family may contribute up to $5,800 in pre-tax dollars to their Health Savings Account, which then grows tax deferred and can be used to pay future medical expenses, tax-free.
The December 1st deadline is drawing near to secure substantial savings on your current year taxes. With the upheaval in our economy, there has been quite a surge in the number of people applying for HSA-qualified health insurance. HSAs, or Health Savings Accounts, allow you to put aside pre-tax money to cover future medical expenses. Anyone that has a plan in effect no later than December 1st is qualified to make a tax deductible contribution to their HSA during the current year, and may be able to reduce the taxes they owe on April 15th by $1900 or more.
While conventional co-pay plans continue to be popular, there has been a large increase in the number of people choosing to invest in health plans that work with Health Savings Accounts. HSA plans have become a better choice for many because these plans have premiums that are usually quite a bit lower than conventional co-pay plans. HSA plans also come with the added incentive that any money deposited into the HSA is tax deductible, which will directly lower the plan holder's taxable income. A growing number of people are finding that a Health Savings Account is both a wise investment and a valuable way to meet their health insurance needs.
In addition to reducing their premiums and lowering their taxes, HSA holders are also able to begin building a tax-deferred medical retirement account. These accounts have proven their value for people who have built their accounts and later experienced unexpected medical issues. Rather than having a large amount of out-of-pocket expenses, these people were able to make a withdrawal on their HSA tax-free to cover the unexpected medical bills. Any growth to this account is tax-deferred and if a withdrawal is made for just about any kind of medical expense, that withdrawal is made tax-free.
If you have seriously considered making changes to your current health care arrangements, now is the time to act. At the very least, you could start your own investigation to see if an HSA would be a wise decision for you and your family. You must have your HSA-qualified health insurance in force no later than December 1, in order to take advantage of an HSA contribution and receive the accompanying tax reduction during the current year. Due to the fact that the underwriting process can sometimes take a few weeks, most insurance experts recommend that you apply for a plan as early as possible.
Anyone who does have a HSA insurance plan in place before December 1 will be able to contribute to their Health Savings Account up to $2900 as an individual, or up to $5800 as a family. People over the age of 55 can also make an additional contribution of up to $900 to their account. All money placed in these accounts, up to the limits just stated, is not subject to taxes. Someone in a 28% tax bracket who makes a $5800 contribution to their HSA will reduce their April 15th tax bill by $1624-even more when they count the savings on their state income taxes.
If you are paying for your own health insurance, now is the time to investigate a Health Savings Account. Online insurance agencies make comparing premiums and applying for coverage simple, and the lower premium and reduced taxes could add up to $4000 or more in annual savings.
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ABOUT THE AUTHOR
By Wiley Long - President, HSA for America (http://www.health--savings--accounts.com) - The nation's leading independent health insurance firm specializing in individual and family health insurance coverage that works with Health Savings Accounts.