• Home
• Contact Us

• Account Login
• Our Services
• Professional Team
• Tips and News
• Firm Memberships

Home » Tips and News »

Health Savings Accounts Can Save You Money

The recently passed 2003 Health Savings Act contains important provisions that create private tax-free accounts that individuals can use to save for their health costs. The new accounts create a tax incentive to save for healthcare expenses, while simultaneously shifting some health care spending decisions to the individual consumer level.

Known as Health Savings Accounts (HSAs) , these are tax-advantaged savings accounts that can be used to pay for medical expenses incurred by individuals, their spouse or their dependents. A provision of the act though requires that the participant must also be enrolled in a high deductible health insurance plan. At that point the tax-deductible savings account may be opened.

These tax benefits are schedule to start in January 2004. Features include:

• These accounts are available to those who have health insurance with annual deductibles of at least $1,000 for single coverage or $2,000 for family coverage;
• Participants can make tax-deductible deposits to the accounts and up to 100 percent of the health care plan deductible may be saved annually (limit: $2,250 for self-only coverage; $4,500 for family coverage);
• Employers can deduct contributions to HSAs for employees who are eligible;
• Money can be withdrawn from an HSA for purposes other than medical expenses after payment of income tax plus a 10 percent penalty. The penalty will not apply in the case of distributions made after retirement age or for distributions made as a result of death or disability;
• Assets can be passed on to the surviving spouse.

Our tax experts at Groen, Kluka & Company would be happy to help you determine if a Health Savings Account makes sense for you. For more information call us at (248) 362-5000.