Health Savings Accounts
If you are considering changing your health insurance
policy, you should be aware of the alternative of a
Health Savings Account (HCA).
Health Savings Accounts started to become available
(and legal) in 2004, allowing people with
high-deductible insurance policies to set aside
tax-free money to fund medical expenses up to the
maximum deductible amount.
If you don�t have to use the funds, it rolls over
every year. Once you reach age 65, you no longer are
required to use it for medical expenses, although you
certainly can; you can withdraw funds under the same
conditions as a regular IRA.
Although you will be penalized if you use the funds
for non-medical expenses prior to age 65, you can use
the money for vision care, alternative medicine or
treatment and dental care.
For 2008, an individual may fund up to $2,900 tax
free. The maximum deductible would be $1100 and the
maximum out-of-pocket cost would be $5,600.
For a family, the maximum tax-free contribution is
$5,800 with the maximum deductible of $2,200 and the
maximum out-of-pocket cost would be $11,200.
Health Savings Accounts are certainly a viable way to
shelter income while providing catastrophic insurance
coverage in light of the high cost of low-deductible
health insurance plans.
For healthy people, it deserves some research. Consult
with your insurance agent for all of the details
involving this approach to managing your insurance
needs.