Today TaxMama hears from Jo Ann in Missouri, who asks, “Where can I find information about those medical savings accounts where you deposit an amount to use for medical expenses?”
Hi Jo Ann,
They’re called HSAs – Health Savings Accounts and Health Savings Arrangements.
The Health Savings Account is the bank or financial institution where you deposit your money.
The Health Savings Arrangement is the insurance company and plan that provide your coverage. eHealthInsurance will help you shop among the different plans.
Enter your family members, their ages and whether they smoke or are students – and eHealthInsurance’s magic computer will give you a list of insurance plans, showing the prices, deductibles and more. That will help you select the right plan – or at least give you something to discuss with your insurance agent.
Remember, the higher the deductible, the lower your premiums. If your family doesn’t spend much time with medical care, these plans can be a very good deal. They will cut your premiums and build up your retirement savings. (As long as you do deposit your maximum allowable contribution of $2,850 for individuals and $5,650 for families, that is.)
If you do need lots of care, you won’t have any savings, but you will get a deduction for the contributions.
The big question is – if your family does use medical services, will the out-of-pocket, high deductible, cost you more than your savings in premiums and taxes?
And remember, you’ll find answers to lots of questions, about HSAs and other tax information, free. Where? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]