Health Savings Accounts (HSAs) combine health insurance with a tax-free investment vehicle. To take advantage of this exciting new opportunity, you must select a plan of benefits called a “high deductible health insurance policy.” As the name suggests, these are plan designs that include high up-front deductibles, as defined under Federal law, ranging between $1,000 and $5,100 for singles,and between $2,000 and $10,200 for families.
Each year, HSAs allow individuals to legally avoid federal income tax by saving 100% of the health plan’s deductible, up to $2,650 for singles or $5,250 for families, into an HSA account. Older Americans can save even more! Money deposited in the savings account may be used to pay the deductible and a variety of other medical related out-of-pocket expenses. Money left in the savings account earns interest or can be invested like an IRA and is yours to keep.
Because of the high deductibles, the premiums are very affordable, which makes dollars available to fund the savings accounts. Why pay a higher premium to an insurance company, when you can invest those dollars for your personal benefit?