Health Savings Accounts

Health Savings Accounts are a revolutionary new way to save money on both health insurance and taxes. There are two components of an HSA: A qualified High Deductible Health Plan (HDHP) and a tax advantaged trust account (the Health Savings Account).

The Health Savings Account itself is basically a Medical IRA. Contributions to the account are tax deductible, and the account can earn tax deferred interest. Annual contributions are limited to the lower of $5,250 (for families), $2,650 (for individuals), or the deductible of the health insurance policy. These funds can be used to pay for a variety of medical expenses. The types of expenses that are eligible are much broader than those allowed by most standard health insurance policies, allowing you to pay for many services with tax free money instead of your after tax income.

Here are a few examples of the items aside from normal medical bills that your HSA can be used to pay for:

Acupuncture Artificial Teeth Birth Control Pills (by prescription) Chiropractors Contact Lenses Crutches Dental Treatment Dermatologists Eyeglasses Fertility Enhancement Gynecologists Hearing Aids Hospital Services Laboratory Fees

Lasik Surgery Long Term Care Insurance Nursing Care Orthopedic Shoes Over-the-Counter Medicine Prenatal Care Prescription Drugs Prostheses Psychiatric Care Smoking Cessation Programs Telephones for Hearing Impaired Vaccines Vitamins (by prescription) Weight Loss Programs X-Rays

The high deductible health plans used in conjunction with Health Savings Accounts are generally much less expensive than traditional health insurance. The difference in cost is often used to fund the HSA's trust account. The minimum deductible for a single person policy is $1,000; $2,000 for family plans. There are no co-pays before the deductible is satisfied, aside from prescription drugs (note: the prescription benefit must be a rider or separate policy).