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Health & Fitness

What Are Health Savings Accounts?

Have Health Savings Accounts helped to reduce your medical costs?

One way to lower your health insurance premiums is by using a high deductible health insurance plan. Further, private insurance carriers and many group plans offer Health Savings Account (HSA) qualified plans that have this high deductible feature. These offer the insured an opportunity to place funds on a pre-tax basis into a special account that rolls over from year to year. The funds can be used to pay qualifying medical expenses without a federal tax liability. Some HSA accounts utilize debit cards or checks while others work through reimbursement to the medical provider. 

Importantly, the funds are the property of the policy holder and can be withdrawn for any reason. Note however, the tax advantaged treatment is only for qualified medical expenses and a penalty may apply otherwise (unless you have a qualifying disability or have reached age 65). 

Also note in 2011, use of these monies for over-the-counter drugs must be accompanied by a doctor’s prescription. For 2011, an individual can contribute $3,050, families are able to contribute $6,150. Catch up contributions are available for those over 55.   

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The purpose of this blog is to provide awareness of these plans only. It is very important you look carefully at your specific situation to determine if a HSA qualified plan is right for you. This includes looking at the coverages, the premium, the deductible amounts, your needs, and your tax situation. For some, these plans can offer significant savings.

It would be great to hear from Cumming Patch readers as to what your experiences have been…both pro and con!

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