Consumers can take more control of health-care expenses
By State Farm® Agent Brent Cooper
Are you looking for a way to trim your health-care costs, reduce your federal income tax liability and potentially save more for your future? You can contribute to a Health Savings Account (HSA) which, when used in conjunction with a high deductible health plan (HDHP), helps individuals save for qualified medical and retiree health expenses on a tax-free basis.
Anyone may contribute to an HSA on behalf of an eligible individual – you, your employer or anyone. Your contributions and the contributions of others are tax deductible and, if your employer chooses to contribute, those contributions will be deductible by your employer and not included in your income.
All earnings in an HSA are tax deferred and distributions are tax free if used for qualified medical expenses, including long-term care premiums. This allows you the opportunity to pay for your medical expenses with pre-tax dollars. In addition, any unused HSA funds may be withdrawn after you turn age 65 with no penalty. The funds will be taxed as ordinary income.
HSAs are portable, with rollover provisions, allowing you the opportunity to move funds from one HSA to another. If you obtained an HSA through your employer and change jobs, you can roll over your HSA into a new HSA and take the funds with you.
HSAs are important, particularly for those who are under or uninsured, small business owners or anyone facing the challenge of affording quality health insurance coverage. But the advantages don’t stop there; even if you’re adequately insured, but want to reduce the cost for health care, HSAs may apply to you as well. Talk with an insurance professional for more information on HSAs.
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