As healthcare costs continue to rise, many Americans are forced to evaluate their insurance plans and savings habits to ensure they can continue to manage their healthcare expenses. As a result, many individuals, families and even employers are seeking Health Savings Accounts, which help save money specifically for healthcare expenses while earning interest and reaping the benefits of tax advantages.
Health Savings Accounts (HSAs) are still a widely misunderstood financial tool. In this article, you will learn what they are, how they work, and where you can find additional information.
What is a Health Savings Account?
- An HSA is an account owned by an individual to pay for future qualified medical expenses. If you have a high deductible health insurance plan, you could qualify for an HSA.
- Despite being called a savings account, an HSA is technically a checking account that earns interest. HSA owners can contribute annually the maximum amount set by the IRS for individual or family covered plans. Both employees and employers can contribute to a Health Savings Account.
- Small businesses can offer HSAs as an attractive benefit for their employees. Traditional health care insurance is often expensive for small businesses to offer. With a high-deductible plan and corresponding HSA, business owners can offer employees the financial security they need for health care costs.
How does a HSA work?
- HSAs are similar to Traditional IRAs, except the money is used to pay for qualified health care costs. Contributions can be tax-deductible and distributions are tax-free when they are used for qualified medical expenses. Interest earned is tax-deferred and unused balances rollover from year to year.
- Anyone with a high deductible health insurance plan is eligible for an HSA provided they are not covered by another health insurance plan, entitled to Medicare or cannot be claimed as a dependent on someone else’s tax return.
Additional questions?
For more information, contact a Personal Banker at NebraskaLand Bank or visit http://nebraskalandbank.com/PersonalBanking/SavingsAccounts/HealthSavingsAccount.aspx to see our competitive HSA product and interest rates.