Translate Page To German Tranlate Page To Spanish Translate Page To French Translate Page To Italian Translate Page To Japanese Translate Page To Korean Translate Page To Portuguese Translate Page To Chinese
  Number Times Read : 2152    Word Count: 2007  

Arts & Entertainment
Cars and Trucks
Culture and Society
Disease & Illness
Food & Beverage
Health & Fitness
Home & Family
Internet Business
Online Shopping
Pets & Animals
Product Reviews
Recreation & Sports
Reference & Education
Self Improvement
Travel & Leisure
Womens Issues
Writing & Speaking


Tax Considerations Of Texas Health Savings Accounts

[Valid RSS feed]  Category Rss Feed -
By : Pat Carpenter    99 or more times read
Submitted 0000-00-00 00:00:00
Since Health Savings Accounts (HSAs) were created by the Medicare bill signed into law in 2003 they are being considered by more and more Texans as a health insurance option. Anyone under age 65 who buys a qualified high-deductible health insurance policy can open an HSA. Here is a quick overview on the important tax considerations of HSAs.

How much can I contribute annually to an HSA?

For 2007, you can contribute up to $2,850 for individual coverage or $5,650 for families. If you're 55 and older, you can make a catch-up contribution of $800. Legislation approved at the end of last year allows you to contribute up to these limits, even if your insurance deductible is less.

Do I fund an HSA with pre- or post-tax dollars?

If your employer offers a high-deductible health insurance policy, you may be able to make pretax contributions, like a flexible-spending account. If you open an individual HSA, your contributions will be deductible when you file your taxes, even if you don't itemize.

Are there income restrictions on the tax benefits, similar to an IRA ?

Unlike a number of other tax breaks, there aren't any income limits associated with the tax-favored treatment of HSAs. Anyone under age 65 who buys a qualified high-deductible policy can benefit fully from the tax advantages of an HSA.

What's the difference between HSAs and flexible-spending accounts?

The tax benefits of both plans seem the same, but there are differences. The most important difference is that your HSA balances can roll over from year to year and continue to grow tax-free.

Legislation passed last December allows a one-time transfer of funds tax free from a flexible-spending account to an HSA. The newly revised law also allows individuals to make a one-time tax-free direct transfer of funds from an IRA to an HSA up to the HSA's annual contribution limit.

If my employer offers both an HSA and flex-spending account, can I have both?

Generally, no. You can't have an HSA if you have a flexible-spending account to pay health-care costs or if you have other medical coverage, such as a spouse's policy. However, if your flex plan restricts reimbursements to wellness care, such as annual physicals, and vision and dental care, you can also have an HSA.

If I set up HSA through my current employer, can I take it with me when I switch jobs?

You can keep your HSA account money even after you leave that job, similar to a 401(k). Another benefit of HSAs is that if you are unemployed or laid off and are collecting State or Federal unemployment insurance, you can use funds from your Health Savings Account to pay for your health insurance premiums and for your routine health expenses - all tax-free.

What happens if I want to use the money in my HSA account for non-medical expenses?

You'll incur a 10% penalty - plus an income-tax bill - if you use any of the money for non-medical expenses before you turn 65. After the age of 65, you can use the money in your HSA account for anything you please and you won't be hit with the 10% penalty, but you will have to pay income taxes on that money.

Can a couple that is planning to retire early open an HSA?

Yes. Anyone under age 65 can contribute to an HSA if he or she buys a qualified high-deductible health insurance policy, and he or she can contribute an extra $800 in 2007, if you're 55 or older. This catch-up contribution amount will increase by $100 per year until it reaches $1,000 in 2009.

Do my HSA contributions affect my IRA contributions?

No. Your HSA contributions won't affect your IRA limits of $4,000 per year or $4,500 for those over 50. It's just another tax-deferred retirement savings account.
Author Resource:- Pat Carpenter writes for Precedent Insurance Company. Precedent puts a new spin on health insurance. Learn more at
Article From Articles Promoter Article Directory

HTML Ready Article. Click on the "Copy" button to copy into your clipboard.

Firefox users please select/copy/paste as usual
New Members
Sign up
learn more
Affiliate Sign in
Affiliate Sign In
Nav Menu
Submit Articles
Submission Guidelines
Top Articles
Link Directory
About Us
Contact Us
Privacy Policy
RSS Feeds

Print This Article
Add To Favorites


Free Article Submission

Website Security Test