If you have heard about Personal Health Savings Accounts and want to start one, knowing the basics is important. As the name suggests, a health savings account basically allows you to save money for healthcare, in times of need. In other words, you will be in charge of health care spending and can avoid unwanted financial mess. You can find many detailed reviews and information about HSA pre tax, but here are some basic facts worth knowing.
What is a Health Savings Account (HSA)?
For the uninitiated, a Health Savings Account is a ‘tax preferred’ bank account. Note that post-tax contributions can come from various sources and are tax deductible. The interest earned is tax free. The money you spend on medical expenses remains tax free too, which includes dental and vision treatments. If you have dependents, they also get the benefits of HSA, but don’t have to be on your insurance.
Benefits at a glance
There are several benefits of a Health Savings Account. First and foremost, you don’t need a minimum balance to start your account, and there is no fee for enrollment, if you enroll online or at the workplace. Services like debit card and online banking are available for HSA account holders. A Health Savings Account is a prudent way of saving for medical expenses for the future, or after your retirement. The account will remain the same and will be operational, even if you choose to change jobs in between. If the money in your Health Savings Account is unused, there is no loss. Please note that there is a limit to the contribution that can be made each year to HSA, for an individual or family. You can check IRS website for more details on the same.
Applicants need to have Qualified High Deductible Health Plan to apply, and the person may not be enrolled in “Medicare benefits”. The applicant shouldn’t be a dependent on someone else’s taxes and must not be covered by medical insurance of their spouse. Please check all the relevant requirements in detail before applying.
Things to know
Making deposits in your account is easy. The simplest way is to ask your employer for pre-tax deposits via payroll. Your employer will ask for the routing number and your account details. If pre-tax deposits, you can ask for post-tax deposits.
You can also consider a recurring deposit, for which a few simple steps must be followed.