Gas prices, day care and health care are big expenses families can have each month. The ever-increasing costs of health care have left families and businesses struggling to find solutions. One way to minimize health expenses by realizing tax benefits is through health savings accounts (HSAs). What is a health savings account? A health savings account is an account that you set up at a financial institution, just like a typical savings account. However, with HSAs you are able to set aside money before taxes each year to pay for qualified medical expenses such as doctors visits, prescription drugs and many others. Who qualifies for an HSA? Anyone with a qualified HDHP is eligible. Contributions can be funded by employer, employee or combination of both within the same calendar year. Advantages of HSAs Combined with high deductible insurance, the HSA offers protection against high or unexpected medical bills. Money can be saved in the account for future medical expenses as well as grown through investment earnings. The accounts are completely portable. This means you can keep your HSA if you change medical coverage, become unemployed, move to another state or change marital status. How do I withdraw money from my account to pay for expenses ? Financial institutions offer different solutions to this question. Many offer check cards or checks which can be written to pay for qualified medical expenses. Consult your local financial institution for details. After age 65, funds can be used for other purposes without paying IRS penalties. HSAs may be used to pay for any “qualified medical expense” as defined by federal tax law. It includes medical care and services, dental and vision care, even over-the-counter drugs such as aspirin. One noteworthy benefit of an HSA is that you can use the money in the account to pay for the expenses for yourself and your spouse. If you’re interested in signing up for a health savings account there are several options available. You can sign up for HSAs with banks, insurance companies and other approved companies. Your employer may also set up a plan for employees as well. How much will a health savings account cost? An HSA is not something you purchase; it’s a savings account into which you can deposit money on a tax-preferred basis. The only product you purchase with an HSA is a High Deductible Health Plan, an inexpensive plan that will cover you should your medical expenses exceed the funds you have in your HSA. Additional in for mation about health savings accounts Visit your local financial institution for more information. You can also visit the U.S. Department of Treasury’s website, www.treas.gov; HSA information is under Resources and Taxes.
Denise Wheaton has served as a senior vice president with Independent Bank since 1987. In her service at Independent Bank, Wheaton helps manage the bank’s assets and network of full-service banking and loan offices. Regionally, Wheaton offers community banking leadership to 22 markets, and directs branch and retail administration.