Health Savings Accounts
Health Savings Accounts are designed to compliment high deductible group and individual health insurance policies. Consumers often choose high deductible insurance policies in exchange for lower monthly premiums.
Owners of a HSA qualified health insurance policy can then setup their account at any number of financial institutions. Monies contributed to a HSA are tax deductible (up to yearly limits) and can be withdrawn tax free to pay for qualified medical expenses.
We work with the leading HSA qualified health insurance providers including Aetna, Anthem Blue Cross and Blue Shield, Assurant Health, Humana, Golden Rule, United Healthcare, Medical Mutual of Ohio and several others.
On our site, you can compare health insurance quotes with the most popular and affordable carriers to obtain a competitive individual or family HSA quote and enroll direct. We are always available for a free, no obligation consultation as well.
2014 HSA Contribution Limits And Maximums
There are only a few criteria that must be met in order to participate in a HSA plan. First, individuals or employees must be enrolled in a qualified high deductible health insurance plan. Such plans will be clearly advertised as HSA compatible.
An annual deductible of at least $1,250 for an individual policy or $2,500 for a family plan must be selected. The insured can choose to establish a health savings account at the financial institution of their choice.
The maximum out-of-pocket limit is $6,350 and $12,700 for individual and family HSA qualified plans respectively in 2014. The catch-provision for those 55 and older is $1,000 – same as it was in 2013. Using the catch up provision, both spouses could deposit an additional $1,000 in their HSA each year after age 55.
Not counting the catch-up provision, the maximum HSA contribution amount for 2014 is $3,300 for individual coverage and $6,550 for family plans.
HSA Tax Deductions and Investment Options
Dollars contributed into a HSA by an individual or an employer are considered pre-tax by the IRS. In this way, a health savings account works much like an Individual Retirement Account. The contributions to a HSA are tax deductible and grow tax deferred. Unlike an IRA, monies can be withdrawn from your HSA tax free for qualified medical expenses.
A money market account can be used to safely harbor your contributions until they are later needed. Additionally, many health plans offer mutual funds as an investment option to offer overall growth potential. Of course, some market related instruments will add risk and can deplete health savings accounts due to market fluctuations. Investment losses are not tax deductible. It is best to shop around for an HSA provider offering the best terms. Your HSA and health insurance policy do not need to be with the same company.
You are not taxed on any interest or fund appreciation in your HSA account as long as funds are used for qualified expenses. The IRS has a long list of what is considered a qualified medical expense, but it can be something as simple as paying for a doctor’s office visit, meeting the deductible and coinsurance amounts or dental work.
Unused dollars in a HSA plan rollover year to year while the account value increases through tax deferred earned interest or investment growth. The plans are portable, meaning the contributions are not lost should the underlying health insurance coverage later be discontinued with the insurance company. You own all deposits and can name a beneficiary for the accumulated value at passing.
Closing Or Terminating A Health Savings Account
Should you later cancel your health insurance or no longer need a HSA plan, the accumulated funds can be withdrawn. All funds that have not been spent on qualified medical expenses would then be taxed as ordinary income when withdrawn.
If the funds are withdrawn before age 65 for anything other than qualified medical expenses, then they can be penalized at a 20% level by the IRS. This penalty does not apply after age 65 however. Some consumers use the accumulated funds in their HSA to purchase long term care insurance as the purchase of LTC plans are deemed a qualified medical expense. This can be a very wise way to use unneeded HSA funds.
Once age 65 is reached most consumers discontinue their individual and/or family health insurance plans, opt into Medicare and purchase Medicare supplement insurance. Funds remaining in a HSA would not need to be withdrawn lump sum; rather they could used for other qualifying medical expenses not covered by Medicare.
Yearly HSA Contribution Methods And Maintenance
Recently passed legislation allows for lump sum contributions by account holders up to the above listed maximums. Deposits are no longer limited by the insurance deductible selected.
Additionally, consumers may transfer tax deferred dollars from a qualified plan like an IRA (Individual Retirement Account) in order to immediately fund an HSA. Employer plans will allow account owners a one time transfer from a FSA or HRA plan.
Health Savings Accounts are designed to be easily maintained and operated. HSA specific websites are setup by the insurance providers so that account holders can manage their deposits and expenditures online. In addition, many insurance companies issue checkbooks and/or credit cards to the insured that draw directly from the account.
Contact us today for your HSA health insurance quotes!