Health Saving Accounts

Determining Whether or Not to Invest in an HSA

Everyone has questions regarding whether or not they should invest in health savings accounts and many people have never even heard of an HSA. A health saving account does exactly what it says it does, it’s an account that you can set up to save for unforeseen medical events in your lives. Right now, the maximum yearly amount for an individual to contribute is $2,850, while family contributions are $5,650. These contributions may be lump sum or in any amount you wish to put in, unless your trustee has imposed a minimum deposit or balance requirement.

These contributions can be used as an “above-the-line” deduction or on a pre-tax basis if an employer is contributing to your HSA. Your “above-the-line” deduction does not have to be itemized to benefit. You may also claim your medical expenses, without including neither your contribution nor distribution of your HSA.

Self employed business owners may not contribute to their HSA on a pre-tax basis, nor will they be able to use the contributions as a deduction for SECA purposes. However, they may contribute with after tax dollars and use the “above-the-line” deduction.

Yes, these will save you money on your health insurance. The reason that it is a little cheaper on your health insurance is because you have to have a high deductible insurance plan in place. High deductible insurance plans are more inexpensive, because you have choosed that you will take the chance of paying a higher deductible rather than to pay with higher premiums. This makes it crucial that you have funds available in your HSA, because you will need those funds to pay that high deductible.