Health Savings Account.

HEALTH SAVINGS ACCOUNT FOR SELF-EMPLOYED WORKERS

Even with a good health insurance policy, medical care can be expensive. A health savings account helps keep those out-of-pocket expenses down by helping you save now. Take a little bit out of your paycheck every month and place it into a savings account, where it sits until you need it. Use the funds for regular check-ups or significant surgeries. It’s your money to use as you wish.

WHAT IS A HEALTH SAVINGS ACCOUNT?

A Health Savings Account is a savings account that can be used to pay for qualified health-related expenses. You pay into the account every month, and then you use the funds to cover trips to the doctor, prescription medication, or other medical care. HSAs work hand-in-hand with high-deductible health insurance plans to cover deductibles, copayments, and other medical expenses.

Since the contributions that you make to your HSA account come from pre-tax income, you’ll have a lower taxable income and less tax liability. It’s no wonder that so many people opt for an HSA account.

WHAT ARE THE ADVANTAGES OF HAVING AN HSA?

Opening a health savings account can have excellent tax benefits. First of all, HSA contributions are made from pre-tax income, which means that your take-home income will be taxed less. On top of that, the contributions you make to your HSA are tax-deductible, and the interest you earn in the account is tax-free.

But even without those savings, HSAs make a lot of sense. Your contributions can roll over year to year, and the money in your HSA savings account goes wherever you go. If you decide to start a new business or become an employee of one, you can keep your HSA and all the money inside of it. Plus, your HSA account helps lower the cost of healthcare because you have a savings account that you can tap into when needed.

WHO IS ELIGIBLE FOR AN HSA?

Only those with a high-deductible health plan (HDHP) are eligible to open a health savings account. Your HDHP must have a certain minimum deductible amount and an annual out-of-pocket maximum. In 2021, the minimum deductible is $1,400 for an individual and $2,800 for a family, and the maximum out-of-pocket amount is $7,000 for an individual and $14,000 for a family.

An individual must meet the following requirements in order to open an HSA.

• Has a qualified HDHP
• Does not have other health coverage
• Is not currently enrolled in Medicare
• Is not a dependent

WHAT COUNTS AS A QUALIFIED MEDICAL EXPENSE?

The majority of medical-related expenses can be covered by an HSA savings account. They include:

• Medical care
• Dental care
• Vision care
• Prescription drugs
• Over-the-counter medications
• And more