Can A Health Savings Account Help You Bridge Employment Gaps?
Posted on August 26th, 2010
Health Savings Accounts may have been stifled by complex regulations, but these accounts can do much more than just turn your healthcare bills into tax deductions. With unemployment a constant threat, health savings accounts help people maintain coverage between jobs, and even into retirement.
Anyone under 65 can start a Health Savings Account once they buy a qualified high-deductible health insurance plan. That’s an insurance plan with a deductible of at least $1,050 for individuals or $2,100 for families. These plans mush also have a limit of $5,250 for an individual and $10,500 for a family on their out-of-pocket costs.
HSA Plans have a great advantage over flexibility spending accounts for medical expenses because, unlike flexible spending accounts, HSA contributions and gains roll over from year to year. Any funds not used annually in a flexible savings account are lost at yearend or when employment ends. All withdrawals from a Health Savings Account must be for qualified healthcare expenses otherwise you face a penalty of 10 percent.
Health Savings Accounts are completely independent of employment so these funds can be used as a “safety net” when jobs are lost, or workers move to new jobs. After retirement, these accounts also offer another investment option with tax deductions on contributions, tax-free growth and tax-free withdrawals to pay for healthcare costs. There’s just one caution once you retire: withdrawals to pay for something other than qualified healthcare expenses are still taxable after age 65.
To find out more about how HSA plans differ from flexible spending accounts, visit our website for information about health savings accounts and the high-deductible insurance plans that are qualified to work with them.
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Tags: Employment, Health Savings, Health Savings Account, Savings Account
Filed under Health Insurance |