Control Health Care Costs and Save Taxes?
One of the most prominent issues being discussed in the media is the rising cost of health insurance. Employees are being asked to contribute an ever increasing amount of their pay to group insurance premiums. Employers face double digit increases health insurance premiums while dealing with customers who are not accepting price increases. Self?employed individuals and those who must purchase individual health insurance are feeling this same bite out of their own pocket. These are in addition to the cost concerns of medications and prescriptions.Health Savings Accounts may be a way to cut health insurance premiums, take control of health care costs and save money on taxes.Health Savings Accounts (HSA) were part of the Medicare Act Congress passed in December, 2003.
They are designed to help take control of health care expenses with a tax-favored savings account and a high deductible health insurance plan. Money in the savings account helps pay the deductible and health expenses until the insurance benefits kick in. The funds left unspent in the HSA remain in the account and accumulate earnings tax free. In the same fashion as an IRA, one can build tax-sheltered nest eggs; in this case, to cover out-of-pocket medical costs.High Deductible Health Insurance is needed to get the benefits of an HSA. The law requires that the savings account be combined with high deductible health insurance.
The minimum high deductible for an individual is $1,000 and $2,000 for a family. The deductible chosen can be higher than those amounts, which would provide an even greater tax deduction. In 2004, an individual can shelter up to $2,600 and a family up to $5,150. An additional $500 contribution for 2004 is allowed for taxpayers 55 and older. Because the insurance company doesn't have to process and pay claims for routine, low-dollar medical care high deductible health insurance costs less than traditional $250 or $500 deductible coverage.Contributions to the HSA are with pre-tax dollars, a tax deduction right off the top of income.
Any investment growth and withdrawals for health-related expenses are free from taxation. That makes the tax benefits better than those of an IRA. With IRAs, the money is taxed either before it goes into the account or can be taxed if withdrawn prior to age 59-1/2. A typical scenario for someone purchasing an individual policy: A 50 year old male with a spouse and dependent children purchases a health insurance policy with no deductible and a $45 office visit co-pay for doctors' office visits for a premium of about $600 per month. By choosing to open a Health Savings Account and opting for a high deductible of $5,000 the monthly premium might drop to $375.
The savings in premium of $225 would then be put into the HSA on a monthly basis accumulating to $2,700 by the end of 12 months. An additional amount of $2,300 could be contributed for a maximum deduction of $5,000 from taxes and a nest egg of that amount from which to pay medical expenses.Even if medical expenses equaled $1,000 per year, $4,000 would remain in the account. The next year, another total contribution of $5,000 would be added bringing the account to $9,000 without counting tax free earnings or taking out expenses. Even if the family has and average of $1,500 per year in medical bills, the account would still have a year end value of at least $3,500 per year. At a normal retirement age of 65, those dollars would add up over 15 years to a total of $52,500 not including the tax free earnings compounding in the account.
At a 2% interest rate, total account accumulation would be $60,526.As an additional protection for later years, the HSA allows, in addition to medical expenses, the payment of premiums for Long-Term Care insurance.The HSA is not just for individuals. Employers may offer them in conjunction with a high deductible plan. The contributions made by both the employer and employee are tax deductible. They also have particular appeal to smaller, family-owned and operated businesses, and groups of highly compensated professionals such as attorneys and physicians, groups in which employees share in health insurance premiums, partners or shareholders in a Subchapter S Corporation and in groups where employees have different needs.High deductible insurance plans are going to be a dominant force in the health insurance market as a way to stem the tide of double digit insurance premium increases. The HSA is an opportunity to take control of health care costs both for individuals and employers.
It encourages accountability, responsibility and consumerism with regard to health care purchases.?
March, 2004.
Consumer Directed Health Plans
Most of you have heard about "consumer directed health plans". The Bush administration has been a strong supporter of this concept as a way to get a handle on soaring healthcare costs. The recent inaugeration of Mr. Bush signals that consumer directed health plans will increasingly make up a larger percentage of group medical plans over the next several years. In the past, consumer directed plan designs have taken on many forms: Medical Savings Accounts (MSAs), Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs).Many experts consider HRAs and HSAs to be the first generation of viable consumer directed health care products.
HRAs are typically paired with a high-deductible health plan and are employer-funded Section 105 defined contribution plans. HSAs are the latest version of consumer directed health care plans. The core components of HSAs include a high deductible insurance product and a cash spending account. HSAs combine...
Consumer Directed Health Plans
Ira > Consumer Directed Health Plans
Louisiana Bankruptcy Lawyers
Although the laws of the state of Louisiana are different from the laws of the other states, bankruptcy is one area where there are more similarities than differences. This is because bankruptcy relief is under federal law, so the information in this context is pretty much the same in all the states.
But there is one glaring exception. It is about exemptions, the items that you do not lose by declaring yourself bankrupt. Under Louisiana Bankruptcy Law, the exempted items include IRA savings, which is a great exemption indeed.
So for a bankruptcy case pertaining to Louisiana, a better course would be to hire a lawyer who knows this aspect of the state law. Another aspect to be considered is that of time limitations. Although
Louisiana Bankruptcy Laws conform to the federal laws, the time limitations may require the engagement of a lawyer.
If you look keenly into the Louisiana Bankruptcy Law, you will find that the legal terminology used in the...
Ira > Louisiana Bankruptcy Lawyers
401k Plan Loans - An Overview
Allowing loans within a 401k plan is allowed by law, but an employer is not required to do so. Many small business just can't afford the high cost of adding this feature to their plan. Even so, loans are a feature of most 401k plans. If offered, an employer must adhere to some very strict and detailed guidelines on making and administering them. The statutes governing plan loans place no specific restrictions on what the need or use will be for loans, except that the loans must be reasonably available to all participants.
But an employer can restrict the reasons for loans. Many only allow them for the following reasons: (1) to pay education expenses for yourself, spouse, or child; (2) to prevent eviction from your home; (3) to pay un-reimbursed medical expenses; or (4) to buy a first-time residence. The loan must be paid back over five years, although this can be extended for a home purchase. Usually the participant is allowed to borrow up to 50% of their vested account balance...
401k Plan Loans - An Overview
Ira > 401k Plan Loans - An Overview
Health Savings Accounts ? Great Option for Small Businesses and Individuals!
(ContentDesk) August 20, 2004 -- What is an HSA?
Health Savings Accounts ? HSA's are
accounts owned by the individual that allow money put into them to pay for current and future medical expenses.
They are similar to an MSA-Medical Savings Account.
This money can be contributed by you and/or your employer.
You can think of it as an IRA/Flex account combination.
An HSA must be tied to a high-deductible health insurance plan which is designed to fit the requirements of an HSA.
There are limitations on the amount that can be contributed each year.Who will it benefit?HSA's can be beneficial to individuals and small businesses that prefer having high deductible insurance.
This can be extremely beneficial if you only need your insurance for accidents or unexpected medical circumstances.
It is also beneficial if you are looking for lower rates on your insurance but would like to have an account available where you...
Ira > Health Savings Accounts ? Great Option for Small Businesses and Individuals!
Health Savings Accounts ? Great Option for Small Businesses and Individuals!
(ContentDesk) August 20, 2004 -- What is an HSA?
Health Savings Accounts ? HSA's are
accounts owned by the individual that allow money put into them to pay for current and future medical expenses.
They are similar to an MSA-Medical Savings Account.
This money can be contributed by you and/or your employer.
You can think of it as an IRA/Flex account combination.
An HSA must be tied to a high-deductible health insurance plan which is designed to fit the requirements of an HSA.
There are limitations on the amount that can be contributed each year.Who will it benefit?HSA's can be beneficial to individuals and small businesses that prefer having high deductible insurance.
This can be extremely beneficial if you only need your insurance for accidents or unexpected medical circumstances.
It is also beneficial if you are looking for lower rates on your insurance but would like to have an account available where you...
Ira > Health Savings Accounts ? Great Option for Small Businesses and Individuals!
HSA for America Publishes Issue 6 of Maximize Your HSA
(ContentDesk) October 31, 2005 -- HSA for America has published Issue 6 of Maximize Your HSA. We feel it is important to help our clients get the maximum value from their health savings account, says Wiley Long, President of HSA for America.
Because HSA-qualified health insurance plans have high deductibles, charges for doctor visits, prescription drugs, and other medical expenses are typically paid for from the health savings account.
By knowing how to keep these expenses to a minimum, and what expenses can be paid for from a health savings account, an HSA owner can save hundreds or thousands of dollars. Maximize Your HSA is published monthly, and distributed via email.
Previous issues have covered ways to keep health insurance premiums low, how to pay for dental expenses from an HSA, and when over-the-counter medicines or nutritional supplements can be...
Ira > HSA for America Publishes Issue 6 of Maximize Your HSA