Important Health Savings Account Information
Health Savings Account or HSA information are relatively new to our vocabulary. Signed by President Bush in 2003, Health Savings Account information however are gaining more and more interest as the public becomes aware of its many benefits.
The Health Savings Account was created by the US Medicare legislation as a savings or investment account made for the purpose of helping people pay for their medical expenses according to the nation’s rising health costs. It’s designed for the use of a high-deductible health insurance plan to cover a person’s major health-care needs, plus, the benefit of a tax-free health savings account which can be used to pay for smaller health expenditures. And like the Individual Retirement Account (IRA), the HSA fund can also be compounded annually and used for any eligible medical expenses not paid for by the traditional health-insurance.
Tax advantage – that’s good enough to know. However one of the most important Health Savings Account information that a person needs to know first is his eligibility for an HSA. To quality for a Health Savings Account, a person must be under a qualifying HDHP or high-deductible health plan (except preventive-care, long-term care, vision-care, dental, accident, hospital-indemnity, or specified disease insurances); must not be covered by any non-HDHP health plan; is not currently entitled to any Medicare benefits; and must not be a dependent of another person’s tax-return. If a person qualifies then time to find out in detail some Health Savings Account information about the benefits of an HSA-insured patient.
Roth-IRA and Traditional-IRA both do not treat medical withdrawals any differently than regular withdrawals (other than exempt eligible medical withdrawals exceeding 7.5%. of a taxpayer’s adjusted gross-income). Traditional IRA’s qualifying (deductible) contributions are not subject to income-tax but withdrawals before age 59.5 are subject to tax and 10% penalty; also, beyond 59.5, distributions still continue to be subject to income-tax. With Roth-IRA, withdrawals before age 59.5 are also subject to income-tax and 10% penalty (exceeding contributions); however, distributions after age 59.5 are not subject to income-tax and contributions are not tax-deductible. On the other hand, HSA treats qualifying contributions as tax-deductible, eligible medical expense withdrawal as not subject to income tax (whether before or after 65) however other distributions are subject to tax or 10%penalty if taken before age 65. – This is on the good-side. You still need to know about the Health Savings Account information on the bad-side.
The HSA drawbacks include higher deductible than Traditional-IRA, no co-pays for medications or office visits until your deductible is met, and the possibility that you would fail to save any money in your HSA while you have a large medical bill to pay. So you weigh.