Have You Opened Your Health Savings Account

Income Tax Advantages You Need to Know About.

Health Savings Account plans, or HSAs, were intended to provide relief to people faced with high medical insurance premiums. They have been used more frequently as a way of enhancing investment portfolios. Health Savings Accounts (HSA) are relatively new on the tax planning scene. Introduced in late 2004, the intended purpose of a health savings account is to save overburdened consumers money on premiums. Whether you’re faced with buying the right insurance, or looking for new ways to strengthen your investment portfolio, you need to weigh all your options.

“A primary advantage of the Health Savings Account is that IRS rules permit contributions from tax-deductible dollars. Deducting the maximum contribution each year can result in considerable federal tax savings.” says Mike McAndrew from Springberg McAndrew Financial Services, located in Lake Havasu City, Arizona.

“Maximum HSA contribution for an individual in 2009 is $3000. A family can contribute double that, to a maximum of $5950. People aged 55 or older can play "catch-up" by contributing an additional $1000 each in 2009, and for any years afterward. Unlike traditional IRA plans, there are no required distributions or withdrawals after age 70 ½. HSAs have no time constraints placed upon them. “

“HSA monies not used to pay for medical expenses can accumulate and earn tax-free interest and dividends. Health Savings Account funds can be invested in common investment vehicles like stocks, bonds, mutual funds, or CDs. Dividends and interest accrued in the accounts are excluded from the annual tax bill unless the money is withdrawn and used for other purposes. If the funds are withdrawn to pay for qualified medical expenses, it is simply not taxed.”

“High Deductible Health Plan savings can be used for other purposes but will be taxed at the regular federal income tax rates if the worker is aged 55 or older. Persons younger than age 55 who decide to withdraw HSA funds and use them for other purposes will be assessed a hefty 10 percent penalty. “

“An oddity of the Health Savings Account regulation is that contributions can be made from the taxpayer, the employer, or even a relative.”

“The only "catch" regarding Health Savings Accounts is the person with the HSA must be covered by a HDHP (high deductible health plan). HDHPs have lower premiums because the insured is required to pay more out of pocket medical expenses.”

“To qualify for HDHP status, the deductibles for 2009 must be:

$1150 for the individual and $2300 for a family. In order to gain an advantage, a person must have sufficient income to pay out that much each year without dipping into the HSA.”

“Lower-income people with ongoing health problems are better off paying the higher premiums associated with a lower deductible but more expensive health care plan. A Health Savings Account plan is a popular choice, however, for healthy young people who need health care plans only in the event of a medical catastrophe.”

McAndrew continues, “So, while HSAs are supposed to be helping the average Joe, skeptics view them as a tax shelter for wealthy Americans. That's because they can be used as an alternative retirement and estate tax planning tool for individuals who have maxed out the limits on their existing retirement plans. Whether you need a tax shelter or a break on health care insurance premiums, the truth is an HSA could save your family big bucks now and in the future on your income tax return. “

This information was provided to you from Springberg McAndrew Financial Services, Social Security Administration website at ssa.gov and IRS publication 969.

About Springberg McAndrew Financial Services (www.springbergmcandrew.com)

Specialists in the field of financial strategies and insurance products and services, Springberg McAndrew provides businesses, individuals, and financial advisors with a wide assortment of investment and insurance options. As an industry leader, seasoned staffs of licensed professionals help organizations build assets, enhance performance, improve operating efficiency and reduce risk through a wide range of insurance options, asset management and securities services solutions. Springberg McAndrew’s individual clients enjoy sophisticated financial solutions, including investment and insurance services, and financial planning. Working closely with financial consultants and advisors, Springberg McAndrew is able to help them select and present the services that best meet the needs of the clients they serve.

Established in 1973, Springberg McAndrew Financial Services provides financial services and insurance products in the state of Arizona, including residents of Mohave and La Paz County.

Contact:
Mike McAndrew
mike@springbergmcandrew.com
Springberg McAndrew Financial Services, Inc.
928-855-9421, 800-507-4364