Little Known Tips On How To Manage Your Health Savings Account

By Lisa Olsen Posted in Health Insurance News

A Health Savings Account (HSA) is becoming a popular alternative for traditional health insurance plans. Based on the January 2009 census report by America’s Health Insurance Plan (AHIP) there are 8 million individuals covered by a tax free HSA. By 2010, the Department of Treasury projects that there will be around 25 to 30 million individuals covered by HSA policies.

Manage Your Health Savings Account Effectively

Eligibility must be met. To effectively manage a health savings account, an individual must first ensure that he is qualified to open an account. To be eligible, the individual must not be claimed as a dependent on someone else’s current tax return. The individual must be covered by a high deductible health plan (HDHP) and not be enrolled in Medicare or from another health insurance that is not an HDHP.

Do not exceed allowed contribution amount. According to the IRS, The 2010 HDHP minimum deductible for an individual is $1, 200 and $2,400 for a family. The maximum 2010 contribution amount for an individual is up to $3050 while a family can contribute up to $6,150. If a person exceeds the allowed contribution, the exceeded amount must be withdrawn or it will be subject to an excise tax.

Ensure withdrawals are for qualified expenses only. All HSA account holders must keep receipts to prove that withdrawals from the account are qualified medical expenses. Money that is withdrawn for non-qualified expenses will be subject to income tax plus 10 percent additional penalty tax. Qualified expenses include acupuncture, dental and eye care, diagnosis and treatment of diseases; prescription drugs and qualified long term care services. The individual, spouse and all dependents claimed on the current tax return are eligible to use HSA.

Related posts:

  1. What Is A Health Care Savings Account?
  2. Does A Health Care Savings Account Lower My Monthly Insurance Costs?
  3. How Do You Start A Health Care Savings Account?
  4. What Is A Health Savings Account For Health Insurance Coverage?
  5. What Are Archer Medical Savings Accounts For A Health Insurance Policy?

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