Accounting and Tax Services
Jan 20

HSAs – a brief overview

Back in 2004, President Bush introduced Health Savings Accounts (HSA).  Only individuals or families covered under a high-deductible health insurance plan during the year are eligible to contribute to an HSA.  There are minimum annual deductible amounts in order to qualify as a high-deductible plan. So if you haven’t boned up on HSAs yet, here are a few factoids for you: 

  • Money contributed into an HSA is tax-deductible.  Either you contribute into an HSA on your own, or your employer contributes on your behalf.
  • Money invested within the HSA is your money and grows tax-deferred.  Unlike Flexible Spending Accounts (FSA) offered to you as part of your employee benefit package where you set aside a set amount of money to pay for your family's healthcare costs with pre-tax dollars, there is no "use it or lose it" pitfall with HSAs.
  • Money can be withdrawn tax-free from your HSA at any time to pay for your family's healthcare expenses.
  • Any money remaining in your HSA upon your reaching the age of 65 is available to subsidize your retirement.

For more information about HSAs, check out IRS Publication 969.

 

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →