Is an HSA right for you?

So you have committed to getting an individual health insurance plan, you are beginning the challenging process of reviewing plan options, asking peers, and you hear about an HSA, maybe it is right for you. But, what is an HSA? A Health Savings Account (HSA) is a savings account that allows you to set aside money for health care tax-free, think of it as a Christmas Club for your health. You must have high deductible health insurance to open an HSA. Different from other benefit products, an HSA rolls over from year to year (there is no “use it or lose it”), interest is paid, money can be invested in mutual funds, and it is owned by you, individually.
An HSA has many distinct advantages:
-you pay less each month for high-deductible health insurance
-you receive tax advantages on multiple levels: pre-tax contributions to your HSA, tax-exempt interest and investment gains on your HSA, and tax-free withdrawals for qualified medical expenses
-you have complete control over your healthcare dollars, save or spend, it’s up to you
-your HSA is an account that you own and remains in place regardless of where you work or what company insures you
-there are a wide range of eligible medical expenses not typically covered by low deductible health insurance or other healthcare accounts
-your HAS contributions can be directed toward long-term investment vehicles, such as mutual funds, to maximize future value
Here are two great examples of an HSA in practice:
Mary is a single, self-employed, female living in Los Angeles. Her annual income is $60,000. She has an HSA and a high deductible insurance plan, her annual deductible is $3,000. Her monthly insurance premiums on the plan are $150, and she contributes $100 per month to her HSA. She uses the money in her HSA, tax-free, to pay for her contact lenses, as well as acupuncture.
The Barnes family, a family that includes a husband and wife and two children ages 3 and 6, has an annual income of $75,000, a $4,000 deductible and an HSA. They contribute $1,000 at the beginning of each year, and use the account to pay the cost of speech therapy for heir youngest child, tax free.
An HSA might be right for you, consider applying for one, in conjunction with your high deductible insurance plan.

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