Call 1 800 327 1007 Open 8AM To 5:00 PM

What Exactly Is A Health
 Savings Account
Healthcare Plan?

An HSA Consists Of Two Very Simple Parts

• A Higher Deductible Low Premium Health Plan with ONE SIMPLE DEDUCTIBLE FOR THE ENTIRE FAMILY or individual as the case may be. 

• A Health Savings Account (HSA) at the financial institution of your choice.  You deposit money into the account and use the funds to pay for medical expenses that are not paid for as a result of the higher deductible.  In addition you may pay for many other medical expenses not covered by your medical health plan.  All deposits into the Health Savings Account are tax deductible.

Tax Advantages Of An HSA

• Reduce your federal income taxes.  Regardless of how your income was earned, any money you deposit into your Health Savings Account is considered an "above-the-line" deduction, giving you a 100% write-off against adjusted gross income.

• Reduce your adjusted gross income, helping you to qualify for other lucrative tax breaks tied to overall income.  By reducing your adjusted gross income, you may also qualify for additional tax breaks.  For instance, the child tax credit of $1,000 begins to be phased out once a family's adjusted gross income exceeds $110,000.  Keep your AGI below this number, and you maintain the full $1,000 tax credit per child.

• Reduce your state income taxes.  Federal adjusted gross income is also the starting point for most state tax assessments, so saving on your state income tax bill is possible as well. 

• Tax-deferred growth. Like funds in an IRA, the money in your account grows free from federal taxes.  You do have to pay taxes if the money is withdrawn for non-medical expenses, but there is no penalty if you are over 65 years old.

• Pay for dental expenses with pre-tax dollars.  Dental expenses from checkups and cleanings, to braces, to toothpaste, can all be paid for with pre-tax dollars from your HSA account.  You may even purchase prepaid dental plans with funds from your HSA account.  

• Pay for vision care with pre-tax dollars.  You can use HSA funds to pay for checkups, glasses, contact lenses, prescription sunglasses, cleaning fluids, and other expenses related to your eye care including lasik surgery.

• Pay for alternative care with pre-tax dollars.  Health insurance doesn't typically pay for treatments like chiropractic, acupuncture, homeopathy, ayurvedic medicine, herbal medicine, various forms of "energy" healing, faith healing, or any number of other so-called alternative treatments.  One of the advantages of Health Savings Accounts is that the individual consumer has the right to choose their source of medical care, instead of that decision being made by an insurance company or HMO.  Therefore, there are very few restrictions on the type of treatment you choose.

• Pay for aspirin, bandages, cold medicine, and other household medical expenses with pre-tax dollars.  Virtually all expenses related to the treatment or prevention of a medical condition can be paid from your Health Savings Account. 

• Pay Medicare expenses with pre-tax dollars.  When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare.  If you have retiree health benefits through a former employer, you can also use your HSA to pay for your share of retiree medical insurance premiums.  The one expense you cannot use your account for is to purchase a Medicare supplemental insurance or "Medigap" policy.

• Pay for long-term care insurance with pre-tax dollars.  Long-term care premiums can be paid for from your HSA, up to $260 for those under age 40, $490 if you're between 41 and 50 years, and up to $2,600 if you're 61 years or older. 
   

  Tax Deductible Contributions

  HSAs allow you to legally avoid federal income tax by saving 100% of the health plan's deductible, up to $2,700 for singles or $5,450* for families, into your HSA account.  Whatever you deposit into your account up to April 15, is an "above the line" tax deduction for the previous year's income taxes, meaning you get a federal income tax deduction for money you put in even if you don’t itemize deductions.  If your employer makes an HSA contribution for you, it is “excluded” from income, and not subject to any income tax or FICA.  Either way, this will immediately reduce your federal income tax due for the year.  Most states also allow the same deduction for state income taxes.