A Health Savings Account (HSA) can be set up at any time of the year (HSA). An HSA might be just what you need if you want to save money and pay less in taxes at the same time.
These health insurance plans with high deductibles and savings accounts that look like IRAs are easy to understand, have a lot of benefits, and are becoming more popular.
What are HSAs? HSAs were made to help you save as much as possible on health insurance while getting a tax break. A health savings account (HSA) is made up of two parts: a high-deductible health plan that is eligible and a tax-advantaged savings account. A health insurance plan that can be used with an HSA must have an annual deductible of at least $1,050 for a single person and $2,100 for a family. Online health insurance brokers like eHealthInsurance.com offer a wide range of health plans from well-known insurance companies that are eligible for HSAs.
The second part of an HSA is an account that works like an IRA and lets you save money to lower your taxable income. You can put as much money into your HSA each year as your health plan's deductible. So, up to certain limits set by the government, the higher your health plan's deductible, the more tax-free money you can save.
How do the Tax Savings work? If you make $40,000 a year and put $2,000 into your HSA, you'll only have to pay taxes on $38,000. The HSA is meant to help you save for retirement, just like an IRA. You can invest the money you put into your HSA, and the balance will carry over from year to year until you retire.
You can use the money in your HSA to pay for things like over-the-counter drugs, eyeglasses, co-payments, and any other medical costs you have before you meet your annual deductible.
