Preparing for Taxes
Lower Your Health Insurance Costs and Taxes at the Same Time
If you are considering individual health insurance options, or your employer is evaluating its options, you may want to make a push for a fast-growing alternative that can lower both your health insurance cost and your tax bill. Health Savings Accounts (HSA), are becoming increasingly popular for people who want to gain more control over the health costs. HSAs are accounts that act similarly to IRA which allow you to contribute funds, up to $2600 per individual or $5150 per family, on a before tax basis and have them accumulate tax deferred. HSA funds can then be used to pay for all eligible medical costs and those that aren’t used can be rolled into the next year.
In order to qualify as an HSA, it must be accompanied by a high deductible health insurance plan (HDHP). HDHP, as the name implies, are insurance plans that require a high deductible to be paid before benefits kick in. The deductible amount can range from $4000 to $10000, but the premiums are very low. The good news is that your deductible payments can be paid from your HSA funds. For many people, the savings in monthly premiums are simply plowed into the HSA.
People with HSA-HDHP plans can control their total out-of-pocket medical expenses by being especially discerning with regards to the prices charged for services or care. They typically find that, with a little bit of shopping, they can significantly reduce their total medical costs.