Health Saving Accounts


Alternative Funding | Health Savings Accounts

HSAs (Health Savings Accounts) are a viable alternative in health insurance plans. An HSA is a custodial account in the form of a tax-exempt trust that is established for paying for qualified healthcare expenses of an individual and/or his or her spouse and dependents. HSAs were designed to provide eligible individuals with three federal tax benefits:

  1. HSA contributions are tax-free,
  2. Interest and other earnings on HSA contributions accumulate tax-free
  3. Amounts distributed from an HSA for qualified healthcare expenses are also tax-free.
     

HSAs are usually offered in combination with high deductible health plans (HDHPs). To be HSA-eligible, an individual must be covered under an HDHP and not also covered by another health plan that is not an HDHP (with a few exceptions). HDHPs generally have lower monthly premiums and higher deductibles than traditional health plans. HSAs can cover medical expenses until the HDHP deductible is reached. Because HSA amounts are non-forfeitable, amounts contributed to an HSA can increase savings for future health care needs, even into retirement.
 

In general, money placed into an HSA can be withdrawn at any time. Any HSA withdrawal used for a purpose other than to pay for qualified medical expenses is taxable as income and subject to an additional 20 percent penalty. After an individual reaches age 65, the additional penalty tax does not apply to HSA withdrawals.


The basic elements of HSAs are:

Is a Health Savings Account right for you? Tevis Insurance Solutions can provide expert advice. Call us today at 877-838-4779.