Health Insurance Basics - All About Health Savings Accounts (HSA)

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					Presented by Daniel Toriola
Health insurance has become a necessity in today's world considering the rise in the cost of medical care and treatment and the huge population of the country. The escalating cost of medical treatment today is beyond the reach of the common man. Click here to know more

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Health Insurance Basics - All About Health Savings Accounts (HSA) By Kevin Powell

A Health Savings Account is an account that is owned by an individual used to pay for current and future medical expenses. These accounts are offered in conjunction with a “High Deductible Health Plan.” High Deductible Health Plans are health insurance policies that do not cover first dollar medical expenses, other than preventative care. They can also be a: • HMO • PPO • Indemnity plan Health Savings Accounts were created by the December 8, 2003 Medicare legislation that was signed into law by President Bush. These accounts are modeled after Archer MSAs. Individuals who are eligible for HSAs include those that are: • Covered by an HDHP • Not covered by health insurance • Not enrolled in Medicare • Can’t be claimed as a dependent on someone else’s tax return There are no income limits that contribute to HSAs and people are not required to have earned an income to contribute to an HSA. There are certain types of medical benefits that will make you ineligible for an HAS. These are typically referred to as “1st dollar” medical benefits, such as: • Medicare • Flexible Spending Arrangements • Health Reimbursement Arrangements • Tricare Coverage

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A high deductible plan is a health insurance with a minimum deductible that is $1,100 for individual coverage and $2,200 for family coverage. Annual out-of-pocket is limited and includes deductible as well as co-pays and are set at $5,500 for individuals and $11,000 for family coverage. All covered benefits in a plan must apply to the plan deductible and include prescription drugs. If HDHP provides prescription drug benefits, then the prescription drug expenses must be subject to a deductible or the individual may not contribute to the Health Savings Account. In a high deductible plan, preventative care does not include any service or benefit that is intended to treat an illness, condition or injury that is already in existence. There are certain drugs and medications that can be considered preventative care. These drugs are drugs such as cholesterol-lowering medication for individuals who are suffering from high-cholesterol. Contributions to a HAS can be made by either the employer or individual and both. If the contributions are made by the employer, the amount is not taxable. If the contribution is made by an individual, the amount is considered an “above the line” deduction. If others make contributions on behalf of the individual, these contributions can be deducted by the individual as well. As of 2007, individuals are allowed a one-time transfer from their IRA to an HAS as well. There are maximums that are set at $2,850 for self-only coverage and $5,650 for family coverage. Once an individual is enrolled in any type of Medicare, they cannot receive contributions to their account. Although there are numerous benefits to Health Savings Accounts, there are also a few drawbacks. The main drawback is that you must have your deductible paid before you can receive benefits from your health insurance policy. Although these accounts pay for your basic preventative care, there are certain areas afterwards that may not be covered. These plans often tend to benefit only two groups of people, those that are very healthy and those that are very ill. This is because you typically don’t have to pay for many medical expenses. At the same time, those who are very ill and do have large medical expenses on a monthly basis. However, once your deductible is met, the plan will pay for medications with the same co-pay as your other medical expenses. Kevin Powell offers FREE Guide To Choosing The Right Health Insurance Coverage that has helped people just like you to get affordable health insurance. Check it out at

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What You Need to Know About a Health Savings Account By Wiley Long

A Few Important Facts about Health Savings Accounts An HSA - or Health Savings Account - is a tax deductible savings account that some individuals can establish and use to pay for qualifying medical expenses. Health Savings Accounts have been available since January 1, 2004 for American citizens who are under the age of 65 and meet other qualifying conditions. To goal of HSA plans is to help participants save money by reducing their taxes each year and providing them with an investment vehicle that they can use to grow their wealth. Who is Eligible for an HSA Americans may be eligible to participate in HSA programs if they are under the age of 65, live in a state that accepts Health Savings Accounts, and have a qualifying insurance plan. Health Savings Accounts are especially popular methods of paying for health expenses amongst sole proprietors and small business owners who provide HSA plans for the employees along with high deductible insurance plans. Not everyone will be eligible to participate in an HSA program, as participation in an HSA program requires that individuals meet certain requirements, such as having a high-deductible insurance plan. Therefore, some individuals, such as individuals who receive low deductible insurance plans through their employers, may not qualify to participate in an HSA program. How Health Savings Accounts Work An HSA plan is very similar to an IRA plan. Like with an IRA plan, individuals invest money into their Health Savings Accounts on an annual basis with annual maximum contribution allowances. An HSA is tax-deductible, which means that the money that an individual invests into his or her HSA is deducted from his or her annual tax requirement. Because individuals can deduct the dollars that they contribute to their Health Savings Accounts from their gross incomes, they can, essentially, be getting tax-free money to pay for medical expenses. It should be noted that in order to have an HSA, individuals need to make a principal deposit into the savings account, which requires that the individual have some money to begin the account. Like with an IRA, individuals can then use their Health Savings Accounts in order to make investments and grow their savings account. If individuals choose to invest their money, they can invest in mutual funds, CDs, stocks, and other traditionally-accepted investment vehicles. If they choose not to invest their money, they can choose to keep their money in the savings account in the same way they would manage their money in any other type of traditional savings account. As HSA funds grow due to interest accumulation or as a result of investments, the growth on those funds is tax-deferred. The funds are not taxed at all as long as they are used to pay for qualifying medical expenses. However, HSA participants can choose to withdraw funds from their Health Savings Accounts for any

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purpose, including, but not limited to paying for medical expenses. If an individual withdraws money from an HSA for reasons other than to pay for medical expenses, then the financial gain on those funds is tax-deferred until the withdrawal. While HSA participants need to have high deductible insurance plans in order to establish an HSA, participants will have HSA premiums that are lower than fully-insured plans with co-pays. Once you establish an HSA, the funds that you contribute to the HSA will not go away, even if you change insurance plans. In the event that you buy a different health insurance plan that no longer qualifies for HSA coverage down the road, you can still use the funds from your HSA to pay for qualifying medical expenses (even if you no longer have the qualifying insurance plan). However, without the qualifying insurance plan in place, you will no longer be able to contribute funds to your HSA. What are Allowable Medical Expenses? Many medical expenses will qualify for coverage under an HSA plan. These medical expenses include dental check-ups, vision care, doctor's visits, chiropractic treatment, alternative care like acupuncture or homeopathy, and much more. Individuals interested in opening an HSA need to first ensure that they have a qualifying high deductible insurance plan and meet other qualifying conditions. Some individuals also find it helpful to shop around to different banks and brokers for the HSA plan with the lowest fees. In order to be sure that they get the right arrangement for their unique situations, many individuals and businesses find it optimal to work with a qualified insurance agency in order to get the best insurance and HSA plans possible for their specific health and lifestyle needs.

By Wiley Long - President, HSA for America ( ) - The nation's leading independent health insurance agency specializing in individual and family HSA plans that works with a Health Savings Account.

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