Health Savings Accounts Benefit Employer and Employee

Companies are in business to make money.  One of the ways of doing this is by reducing cost.

A health savings account is a good way to reduce cost.

As a result, many businesses are offering high deductible insurances to their employees.

To pay the high deductible, they enroll their employees in health savings accounts.

Funding for the health savings accounts are done by several ways.

• By the company which enjoys a tax deduction.
• By the employee
• Put away pre-tax income
• Hsa grows compounded tax free
• Withdrawals are tax free once used for allowable expenses

• Combination of employer and employee contribution
• They both enjoy tax benefits

Health Savings Account Distribution

Including among a Health Savings Account uses is the choice it affords to the insured.

It affords an alternative to the many health insurance plans that are available.

In spite of the number of plans that are available, there is still a major healthcare problem in the US.

The chief cause of the problem is the spiraling cost of health care.

        Health Savings Account Distribution

A Health Savings Account is set up for high deductible health insurance plans.

It is set up with pre-tax money, allowed to grow tax free and is withdrawn tax free if used for the eligible expenses.

There are certain Health Savings Account distribution requirements.

These are regarding contributions and withdrawals. 

• There are maximum annual contributions.  In 2011 they were:         
• $3,050 for singles   
• $6,150 for families    
• Additional $1000 “catch-up” contribution between age 55 - 65.

• Withdrawal requirements

        Withdrawals must be for eligible medical expenses including       

• Doctors Visits  
• Prescription Drugs    
• Over the Counter Medication  
• Acupuncture            
• Chiropractic Dentist    
• Eye Doctor

•  Withdrawals from an HSA before age 65 should be for eligible medical deductions only.

• Withdrawal for non-eligible medical expenses are subject two penalties
1. A 10% penalty on the amount withdraw
2. Ordinary taxes on the amount withdrawn