Health Savings Accounts - HSA's - The Who, What, Where, When and Why on HSA's.

What is an HSA?

Health Savings Accounts - HSA's are accounts owned by the individual that allow money to be deposited into a tax-deferred account to pay for current and future medical expenses. They are similar to an MSA-Medical Savings Account, which was the predecessor of the HSA. This money can be deposited by you and/or your employer. You can think of it as an IRA/Flex account combination. An HSA must be tied to a high-deductible health insurance plan (HDHP) which is designed to fit the requirements of an HSA. There are limitations on the amount that can be contributed each year.

Who Will Benefit?

HSA's can be beneficial to individuals, small businesses or any size business that is interested in pursuing a high deductible insurance and lowering their healthcare costs. This can be extremely beneficial if you only use your insurance for accidents or unexpected medical circumstances. It is also beneficial if you are looking for lower rates on your insurance premiums but would like to have an account available where you can accumulate funds to use for your medical expenses while meeting your deductible and co-insurance. It can also be used for expenses not covered by the insurance. There is no deadline on withdrawal of the funds and they can be withdrawn for other than medical expenses penalty free after an individual is eligible for Medicare.

When Will They be Available?

They are available now. After doing some internet surfing I found an informative website on HSA's at http://www.americanhealthvalue.com/ that provided a wealth of information about HSA's and even has links to insurance companies that offer the high-deductible medical insurance by state.

Why Have an HSA?

Where Can I Get an HSA Account?

American Health Value - http://www.americanhealthvalue.com/ is one company which offers the administration of this account for a nominal fee. There is a lot of information at this web site about HSA's, about the mechanics of setting up an account, how the account works, how to withdraw and contribute funds, what expenses are eligible and what types of options can be set up. You can click on Insurance Agents by State to find a local agent in your area that sells the high-deductible medical insurance plans that are designed to work with the HSA account. Remember it is important to find an insurance company for any insurance you buy that has a good rating since if they go out of business you will need to find another insurance company and if you have too many claims you may have difficulty finding one that will insure you. Happy Insuring!

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Dianne Goodman, CPA, FCPA -Specializes in servicing Small Businesses and Individuals. Visit www.dgoodmancpa.com for relevant and current information on a variety of financial and tax issues focusing on small and very small businesses and individuals or call at 1-888-851-1975.