HEALTH SAVINGS ACCOUNTS

Health Savings Accounts (HSAs) have only been around since 2004 but are quickly growing. The Treasury Department reports that, as of December 2005, there were 3.2 million individuals covered by HSAs. The department projects that by 2010, 25-30 million people will be covered by these unique health savings plans. Nevertheless, a lot of people haven’t heard of them, or if they have, don’t quite understand how they work. 

HSAs are tax-deductible accounts that allow people under the age of 65 to save money for future medical expenses. The requirement is that your only medical insurance must be a high-deductible health plan. That means that for 2006, your deductible must be at least $1,050 for a single person and $2,100 for family coverage. The benefit is that by changing to a high deductible plan, you will likely lower your health insurance premium by a third to perhaps half of what you’d pay with a low-deductible plan. You can then deposit the savings in your HSA. In 2006, you could save the lesser of your policy deductible―$2,700 for individuals or $5,450 for families. People 55 and over can make an additional catch-up deposit of $700. 

HSA funds are tax-deductible, grow tax-deferred, and can be withdrawn tax-free for qualified health care expenses, including some not covered by the health insurance policy. In addition, the money can be used to pay long-term care insurance premiums. 

Want to learn more about whether an HSA is beneficial for you or your business? Contact David Kahn, Northwest Financial LLC insurance specialist, via dkahn@nwfllc.com or 703-810-1072, ext. 115.

Click on the “Get a Quote NOW” link to find an HSA-eligible plan!