Health savings accounts (HSAs) are a tax-free, government-approved way to save money for medical expenses. Yet many people are unaware that they exist or think that they have to be employed in order to have such an account.

HSAs can provide you with the power to protect yourself and your family from financial devastation as a result of an illness or injury.

Do you qualify?

If you are under age 65 and covered by a high deductible health plan — a plan with an annual deductible of at least $1,000 for individual coverage or at least $2,000 for a family — and no other health plan other than one providing certain permitted coverage, then yes, you qualify. (The dollar amounts are subject to yearly inflation adjustments.)

How do you benefit?

First of all, HSAs provide you with the security of knowing that you have money waiting in the wings for when you have both regular and unexpected health expenses. They allow you to pay for existing health expenses and save for medical needs on a tax-free basis: neither the money you earn on your HSA savings nor the distributions used to pay qualified medical expenses can be taxed.

In addition, either you or someone acting on your behalf, including your employer, can contribute to your HSA, and you can roll over contributions from Archer MSAs (medical savings accounts), other HSAs, flexible spending accounts, health reimbursement accounts, and IRAs.

Is a health savings account right for you?

It could be. I can help you review the specific guidelines and limitations that apply, and review your existing health care plans and expenses to help you make a well-informed decision about whether or not an HSA is right for you.

Please note the information above is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of the information provided below should not be acted upon without specific professional guidance. Please call us if you have any questions.