A Health Savings Account (HSA) is a tax-advantaged personal savings account that individuals can use to save and pay for qualified health care related expenses. When used in conjunction with a High Deductible Health Plan (HDHP), an HSA offers insured's a unique means of more effectively controlling their health care cost-related decisions. Also refered to as consumer driven health plans, HSA plans offer you, the consumer, the ability to determine how to best allocate your account savings. Any usued account balances are "rolled over" to the following year. There is no use-it-or lose-it provision. An HSA offers valuable tax savings. Contributions are Pre-Tax or tax-deductible, interest accumulates on a tax free basis, and distributions are tax-free when used for qualified medical expenses.
HSA Account contributions can be made by the employer, employee, or a combination of both. The maximum contribution levels for 2008 are $2,900 for single coverage and $5,800 for family coverage.
The decision to utilize a HSA account is a personal decision and is not always the best choice for everyone. Let us evaluate your situation to see if consumer driven health plans are the right choice for you.
Health Reimbursement Accounts
Another popular funding concept is the use of a Health Reimbursement Account (HRA). These accounts offer the employer the ability to fund for employee medical expenses on a tax -advantaged basis. Contributions are made into an employer-owned account to be used on behalf of the employees. Reimbursements are generally used to fund for allowable medical plan deductibles and co-insurance payments. The employer can use any type of medical plan when using a HRA. This approach offers the employer the ability to use higher deductible medical plans thus lowering plan premiums and to "self fund" for out -of- pocket expenses. Any unused funds remain with the employer and can be used for future year reimbursements.
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