A Health Savings Account, or HSA, is a unique, tax-advantaged account that can be used to pay for current or future healthcare expenses.
If you have a family of 4, it is likely that you will spend $6,750 in dental, vision, co-pays & scripts throughout the year. If you are in the 28% Federal Bracket & 5% State, then you will save 33% of your 2017 Health Savings Account Contribution or $2,228 in tax if you make the maximum allowable contribution of $6,750 for 2017.
If you do not spend the whole $6,750, do not worry! You can carry any remaining balance forward towards next year. The funds will continue to grow tax free until retirement. You can always use the funds to pay qualified medical expenses at some point in the future, or if you are very healthy, then you can plan to use the accumulated excess funds for retirement.
• A tax-advantaged savings account that you can use to pay for eligible medical expenses as well as deductibles, co-insurance, prescriptions, vision expenses and dental care.
• Unused funds that will roll over year to year. There’s no “use it or lose it” penalty.
• The potential to build more savings through investing
• Additional retirement savings. After age 65, funds can be withdrawn for any purpose without penalty, but may be subject to income tax if not used on eligible medical expenses.
We have had great success with HSA Bank. Here are some links….
All of the following and more….
• Dental Expenses
• Vision Expenses
• Deductible Payments
• Drug & Alcohol Rehab
• Emergency Room Services
• Urgent Care Services
• Long-Term Care Insurance Premiums
• Medicare Premiums
An eligible individual is one who is covered under a high-deductible health plan and is not covered under any other health plan that is not a high deductible health plan. Specifically, you must meet the following requirements:
• You are not covered by any other non-HDHP plan, such as a spouse’s plan, that provides any benefits covered by your HDHP plan.
• You are not enrolled in Medicare or, if you are retired military, in Tricare.
• You are not covered by a general-purpose health care flexible spending account (FSA) or health reimbursement account (HRA). A limited purpose FSA or HRA, providing just dental or vision care may be permitted.
• You cannot be claimed as a dependent on another person’s tax return.
• An HDHP is a health plan with an annual deductible that is not less than $1,300 for individual coverage or $2,600 for family coverage.
Most current plans qualify, even if they are not “HSA” Plans!
• The maximum out-of-pocket expenses for an HDHP cannot exceed $6,550 for an individual coverage or $13,100 for family coverage.
• For self only coverage, the maximum annual deductible contribution is $3,400. For family coverage, the maximum annual deductible contribution is $6,750.
A single individual with at least one dependent is considered a family and is eligible to make a $6,750 contribution.
• For an individual age 55 or over and not covered by Medicare, there is an additional catch-up contribution. For self only coverage the maximum annual deductible contribution is $4,400 and for family coverage the maximum annual deductible contribution is $7,750.
• There is no requirement that an individual have earnings to make contributions to an HSA.
• Contributions can be made until the account holder’s tax return due date which is April 16, 2018, for the 2017 tax returns.
• For HSAs opened after January 1, 2017, maximum contributions are computed based on the number of months you are a member of an HSA. For instance, if you open an HSA in July, 2017, you will be able to deduct approximately 50% of the maximum annual contributions noted above.
If you think that you might benefit from a HSA, please contact us and we will be happy to calculate your tax savings!