With health insurance premiums for family coverage being as high as $800 per month or more, self-employed people and small businesses see their profits disappearing by premium increases of 15% or more per year. People are afraid to cancel their health insurance plans, due to the high cost of medical-care, one day in the hospital is on average $7,000 per day! How can the self-employed people get access to quality health insurance at affordable prices? The solution is health savings accounts.
What is a health savings account? A health savings account, (HSA), is a special tax-sheltered savings account for medical bills. Known as the Archer HSA, it is similar to an IRA and works in conjunction with a special low cost, “high deductible” health insurance policy. Rather than paying a high monthly premium for a policy with a low deductible and low co-pays, you choose a high deductible policy, (for emergencies), with a low monthly premium. You also make regular deposits into a health savings account to cover for smaller medical expenses for doctor visits, dental, vision and prescriptions. These deposits are 100% tax deductible, and can be easily withdrawn by check or credit card. What is not used from the account each year stays in the account and continues to grow interest on a tax-favored basis to supplement retirement, like an IRA. The health savings account plan offers 1) lower premiums, 2) lower taxes, 3) freedom of choice, (ANY doctor), and 4) more cash at retirement!
Who qualifies for a health savings account? A self employed person, or an employee in a small business with 50 or fewer employees qualifies to set up a health savings account. Both the insurance policy and the medical savings account must follow government guidelines. There are financial requirements as well. The insurance policies that qualify must have an individual deductible of between $1,700 and $2,500, and a family deductible of between $3,350 and $5,050.
How much can be deposited into a health savings account each year?
A family is allowed to contribute up to 75% of the deductible amount every year.
The money that’s not spent can be kept tax-free plus tax-exempt interest. If a family has a $5,050 deductible policy, they can contribute $3,787.50 each year, ($5,050 x .75).
An individual is allowed to contribute 65% of the deductible amount. When a single individual selects a plan with a $2,500 deductible, the maximum amount that can be contributed every year is $1,625, ($2,500 x .65).
What kind of medical expenses qualify for favorable tax treatment under the IRS code? Overall, any treatment for an illness or accident and preventative care, such as a PAP test or a mammogram qualifies for favorable tax treatment. Health savings accounts covers what traditional health insurance plans usually don’t cover, such as dental, and eyeglasses. These are expenses permitted under the Internal Revenue code.
Traditional health insurance versus health savings plan:
The following is an example of cost comparison between a traditional PPO health insurance plan and a health savings insurance plan. The comparison is based on real figures. Ex. Husband & wife coverage, wife age 55, male age 51, zip code 33431, and both none smokers. Monthly premium for a traditional PPO insurance plan is $519, while premium for a health savings insurance plan is as low as $386.90! It’s optional, but highly recommended to open a health savings account for further tax savings, where maximum allowable by law is $209.37 per month, (it’s your savings). Total monthly cost is now $596.27, but total tax savings are $166.96, versus $145.32, and net monthly cost after taxes is $209.37, versus $373.68 with traditional insurance. Annual health savings deposits are $2,512.50, (your money), and zero with the traditional plan.
A health savings insurance plan is a valuable and affordable option for the self-employed person. The yearly savings, and tax-deductions are wonderful.
It’s important to have good health insurance coverage, but at the right price!
For more information about health savings insurance plans, or other insurance plans
and to receive a FREE quote, please contact Eva Maria Karlsson at 754-234-HEAL (4325). E-Mail: carlss9@aol.com. Website: www.affordablehealthfla.com.
|
