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Health Savings Accounts ExplainedWhat is a Health Savings Account? Increases in the cost for health care and health insurance now impact both employees receiving their health insurance through an employer group plan and the self-employed seeking individual and family health insurance. Whichever group you fall into, you've probably noticed the rising costs of health insurance. Deductibles and other out-of-pocket expenses have risen to the point that, without careful planning, they can put a serious financial strain on the average American family. In December of 2003, the government took steps to ease the burden on working people when it comes to paying for their health care. The resulting legislation established the Health Savings Account. A Health Savings Account, or HSA, is an account that allows you to save your pre-tax money for out-of-pocket medical expenses. Unlike a flexible spending account (FSA), any money left over at the end of the year can be saved and used for following years. The money may also grow through investments, just like the funds in an IRA, depending on how and where you establish your account. Health Savings Accounts are specifically designed for people with high-deductible insurance plans who do not have any other first-dollar medical coverage. Coverage specific to injury, accident, disability, dental, vision and long-term care insurance is permitted, however, without affecting eligibility for an HSA. Exceptions are those eligible for Medicare (over 65) and anyone who can be claimed as a dependent on someone else's tax return. Individuals in these categories will not be able to open a Health Savings Account. How to Establish a Health Savings Account Your bank, credit union, and insurance company are a few places that can serve as trustees for your Health Savings Account. Any financial institution that handles IRAs or Archer MSAs may also offer the accounts. Once the account is set up, you and/or your employer may make regular deposits up to your allowed deposit amount. This amount is determined by the size of your annual health insurance deductible. Once you've established the account, you'll have a great deal of flexibility. You can choose to use the money for all or part of any qualified out-of-pocket medical expense. Qualified expenses range from co-pay and deductible amounts to prescriptions and even over-the-counter drugs such as aspirin and cold medicine. Insurance premiums generally are not approved; however, premiums for dental, vision, disability and long-term care may be eligible. Health Savings Account Funds The funds in the account belong to you and can be rolled over into some other tax-advantaged accounts such as an IRA if you so choose. You can use the funds for qualified medical expenses until you turn 65. You can also draw on your funds at any time for non-medical expenses; however, you will have to pay income tax on the amount as well as an additional 10% penalty for withdrawing the funds for non-medical purposes. After you reach age 65 you must withdraw the funds or roll them over penalty-free. How you use your HSA is up to you. You may view it as a way to save in the short term to pay for your out-of-pocket medical expenses year to year, or you may decide that you'd rather use the account to accumulate funds toward the medical expenses you'll incur in your retirement before age 65. Either way, the HSA is a new resource that may make the cost of health insurance less burdensome. Other articles by this author »
About Brad Stroh
Brad Stroh is currently co-CEO of Freedom Financial Network and http://www.Bills.com. If you would like more of Brad's http://www.Bills.com/sitemap/, please visit the Bills.com information on http://www.Bills.com/healthinsurance/. Related
And here is another random article you might be interested in... Home Business Ideas For Normal Moms Like You And MeI am a normal, work from home mom, who started my own home business working from home. This article will show you how you, too, can be a work from home mom. After I gave birth to our first baby, Hana, I really couldn't see myself going back to that old job working for Mr. What's-his-name for a measly salary and leaving Hana with a babysitter. I didn't realize how deeply I would LOVE my baby. Do you know what I mean by that? When I was pregnant, I thought, "Right. Have the baby. Find a babysitter. Go back to work. Done." But I loved her so completely and so profoundly, that I really didn't want to leave her. Plus, she was really high-needs and I had spent the last year learning her cues and I felt that only I knew exactly how to comfort her. Would a babysitter really be able to do that? So I set out to figure out what home based business opportunities were out there. First I told my employer that I wouldn't be coming back, but offered to work for him from home. He seemed mildly interested. So I asked for $30 an hour. I never heard back from him. So I took that as a "No". Ha ha! Then, one of my friends offered me some work doing proofreading and editing a magazine she was creating. That was great, except that it wasn't a lot of work, and I ended up making only about $200 a month. Proofreading is a viable home business idea, and you can do it while the kids nap, or at night after they go to bed. There are websites where you can bid on jobs, such as one called Elance. www.elance.com Another thing I looked at was starting a home based daycare. But then I thought about all the colds and flu I'd be bringing into the house... And I also thought I wasn't really cut out to stay home with more than my own kids all day. I think I'd go nuts. So I started thinking about the Internet and how many people make a living from it with home based business opportunities. The only problem was it was really hard to know which companies to trust. I would estimate that I wasted about $300USD trying out different things that turned out to be scams. I was so frustrated! And I felt like a real idiot. One eBook I bought walked me through exactly how to build a one page website to sell an eBook. First I wrote the eBook, then went to all the trouble to build the website, paying monthly fees for hosting, using their templates, etc, and then I never even got a single visitor to my site! So then the eBook explained how to PAY to get people to visit my site â€" frankly, this person was getting rich off me and I wasn't earning a penny. The nice thing about having your own web based business is that it can be about whatever you want it to be. Whether you are into scrapbooking, or cooking, or home organizing, or perhaps you left a job as a flight attendant and your website will offer travel tips to families traveling with children! The possibilities are endless. If you decide to build a website, you will either have to learn all about html or a wysiwyg program like Dreamweaver, or go with a company that has templates and does it for you. You will have to attract visitors to your website (otherwise you will not make any money) and there are a variety of ways of doing this. One is to write articles like this one. Another is to make sure that you build enough content-rich pages so that you get noticed by Google and your site shows up when people search for your keywords. You could pay to get traffic, but there are other free ways of getting traffic. The key to my success, I think, was choosing the company carefully that I was going to give my business to and, ultimately, trust to help me learn how to do everything, because I really didn't know anything about the Internet when i started out. Be very careful of get-rich-quick scams. There is NO SUCH THING. Any legitimate business takes work, real hard work. There are no shortcuts, and that's all there is to it. So any legitimate business will be upfront and clearly state that this is going to be a lot of work. When you research the variety of website-building companies out there, make sure they offer all-in-one packages, and they make it clear what you will get for your money. Make sure there are no hidden costs or extra things you will have to pay for later. Don't pay more than $30 per month (I pay $299 per year for my program). At the very least, they should offer:
Also, what kind of customer service do they offer? Email them a question and see if they get back to you or not. If they don't, don't give them your money! Also, do they make it clear on their website who they are and how they can be reached? I hate those sites with no contact information. It's like they have something to hide. I am so glad I took the leap and started my own website as a result of the many home based business opportunities I researched. It has been a great learning experience for me. I found what works for me. It has made a difference in my life and I hope it can make a difference in yours too. I wish you all the best. Other articles by this author »
About Suzanne Doyle-Ingram
Suzanne Doyle-Ingram is the mother of two daughters, Hana and Alexa, and married to her best friend James, who is a stay-at-home dad and educational game developer (and he makes a mean grilled chicken!). Related
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