Health Savings Account Pro and Cons

On December 8, 2003, a Medicare bill was signed that provides individuals the opportunity to save for future qualified medical and retiree health expenses tax-free. Below are Health Savings Account Pro and Cons and frequently asked questions.

What are the Health Savings Account pro and cons?

Who is eligible for a Health Savings Account (HSA)?

If you are covered by a High Deductible Health Plan (HDHP) and you are not covered by other health insurance that is not an HDHP you are probably eligible to open a Health Saving Account (HSA).

How do I know if my Health Insurance Policy is a HDHP?

Check with your insurance carrier. They should know which policies comply with the federal regulations for High Deductible Health Plans and Health Savings Accounts.

Can any bank handle a health savings account?

No, only a few banks currently offer Health Savings Accounts.

What happens to my money when I turn 65?

The money in your Health Savings Account can be used for medical expenses, tax-free, until you are 65 years old. Once you turn 65, you can continue to use your money for health expenses tax-free, or you can use your money without penalty for other items and pay income tax on the amount withdrawn.

If you use the money in your Health Savings Account for non-health related items prior to 65, there is a 10% tax penalty.

How much can I contribute to my Health Savings Account each year?

You can contribute the amount of your deductible each year to a maximum of $3000 for single coverage and $5,950 for family coverage in 2009. If you are over 55 years old, an additional "catch-up" contribution can be made.

How do I decide if a High Deductible Health Plan (HDHP) and a Health Saving Account (HSA) is right for me?

Here are some questions to ask yourself to help you decide:

Where can I learn more about Health Savings Accounts?

For details regarding Health Savings Accounts, visit the official government site for Health Savings Accounts.

Strategies, tips, and tools to achieve short-term and long-term personal finance goals!

Disclaimer

All of the content presented on www.personalfinancestrategy.com is for informational purposes only. None of the content presented on this website is intended as a substitute for professional financial advice. Articles and other content posted on this website do not necessary represent the views of the website owner. PersonalFinanceStrategy.com does NOT endorse any entity displayed on or hyperlinked to from this website. Usage of this website constitutes acceptance of all terms of use. Terms of use subject to change without notice.