Health Savings Accounts
Health Savings Accounts, tax-advantaged medical savings accounts available to taxpayers in the United States, will become a more popular health insurance option in 2010 as consumers will be able to deduct more of their contributions to these accounts.
Health Savings Accounts (HSAs) were created by the Medicare bill signed by President Bush on December 8, 2003 and are designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis. Though HSAs have expanded steadily since their introduction, they remain relatively rare.
Currently, eight million Americans are enrolled in HSAs, which are available to individuals and families with high deductible health plans. Unspent HSA money rolls over and continues to accrue tax-free interest. Like 401(k)s and IRAs, it’s a plan intended to encourage users to save up big cash cushions they can tap later in life.
According to the Internal Revenue Service, the annual contribution limit on deductions for HSAs will increase $50 to $3,050 in 2010 for an eligible individual with self-only coverage and jump $200 to $6,150 for family coverage.
With the April 15 tax deadline just around the corner, now is a great time for people to start looking for ways to ease their tax burden for 2010. Health plans with HSAs offer protection and a tax-free way to invest—all at a cost that usually is less than what purchasers would pay for a traditional plan.
