Saving with Health Savings Accounts
Linn County LIVING WELL Magazine
A Heath Savings Account (HSA) is similar to a personal savings account, but the money in an HSA can only be used for health care expenses. In order to open an HSA, you must be enrolled in a qualified high-deductible health plan (HDHP).
Typically, with high-deductible health plans, you pay lower premiums than most traditional plans like HMOs and PPOs, but you still have coverage for major and catastrophic health care expenses. HSAs will work together with the high-deductible health plan by helping you pay for eligible health care expenses incurred, before your health plan starts paying benefits.
HSAs allow you to be reimbursed for out-of-pocket money you spend on eligible health care expenses that aren’t covered by your high-deductible health plan, such as amounts you pay toward meeting your deductible, or other expenses like vision and dental care.
With HSAs you use tax-free money. You can make pre-tax contributions throughout the year that you deduct on your federal income tax return at the end of the year. Either way, your contributions to the HSA reduce your taxable income, saving you money.
The money in your HSA can accumulate tax-free, and you can enjoy tax-free withdrawals from your HSA to spend on eligible health care expenses.
Best of all, the money in your HSA is yours to keep. Unused amounts, including interest and investment earnings, roll over from year to year, and you can draw money from your HSA even after you retire and as long as it is applied to health expenses it is tax-free. It’s that simple. It’s your money.
Authorized agent for Wellmark Blue Cross and Blue Shield of Iowa, an independent licensee of the Blue Cross and Blue Shield Association.
*This article is not intended to provide tax advice