What You Should Know About HAS

As the population ages, we become more aware of the need for good medical care and the means to obtain it. Many programs are set up to do just that. A HSA is one such program. Health savings accounts are tax free if used according to the guidelines set by the federal government.

To some people HSA might be mis interpreted as an insurance plan; however it is not. It is made up of two components; one being a HDHP or (high deductible health plan) and a savings account. One feature that is also a part of this account is that everything contributed to the plan must be considered for 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.

The benefits of a HSA account just keep on getting better. HSA accounts can be inherited. The owner of a HSA can make these funds available to someone else should their life expire. This is great news for anyone who is self-employed because of the double benefit gain from using a HSA. The double benefits come in the form of the self-employed health premium paid tax deduction and the HSA contribution tax deduction. Both of these deductions are acceptable "above the line" deductions and can be used accordingly. For anyone considering long term retirement planning, the HSA benefits far outweigh any concerns associated with high deductible health insurance plan.