How an HSA Can Save Health Care Money for Your Business

Things Everyone should Know about Health Savings Accounts

Millions of Americans are looking for simple ways to reduce their monthly healthcare spending without changing the quality of their lives – or putting their healthcare in jeopardy. While many Americans are researching alternative health insurance options, it is important for them to take a closer look at HSAs. On average, consumers can save between $100 and $300 per month simply by switching their health insurance plans to high deductible plans that include HSAs. Here are 3 things everyone should know about HSAs that can help them to save money:


They can help participants grow their wealth. A HSA is a personal savings account into which participants will deposit funds. The accounts are similar to IRAs in that participants can invest the funds from their HSAs into high-yield investments, such as stocks, bonds, and money market accounts.

The money growth from these investments is tax-free if the HSA funds are used to pay for qualifying medical expenses. Participants can use funds from their HSAs to pay for other expenses as well. When a participant withdraws money to use for something other than a healthcare expense, the applicable funds will be taxed only when the funds are withdrawn, making the money growth tax-deferred.

They reduce the annual income tax burden for participants. Whenever a HSA participant deposits funds into his or her HSA, the deposit amount is reduced from the participant’s annual income tax burden. Therefore, if a participant deposits $1,000 into his or her account, the individual will reduce his or her taxable income by $1,000. There are annual contribution limits that participants should be aware of. In 2009, individual HSA participants are allowed to contribute up to $3,000 and family participants can deposit up to $5,950. Participants over the age of 55 can contribute an additional $1,000 per year.

There is an annual deadline for enrollment. The qualifying HSA plan must have an effective date of no later than December 1, 2009 in order for participants to qualify for a tax deduction for 2009. In order to meet this deadline, participants must submit their HSA applications by no later than November 13, 2009 and request an effective date no later than December 1, 2009.

HSA participants can use the funds from their HSAs in several different ways. Many participants withdraw funds from their accounts at the time of the health service to pay for the service. Other participants use the HSA funds to reimburse themselves after a healthcare service has been provided, making healthcare services tax-deductible.

In order to enroll in a HSA, it is very important for participants to be sure that they have a qualifying insurance plan, which is a high-deductible insurance plan. These plans are available through many major health insurance providers, including Aetna, Blue Cross Blue Shield, Golden Rule, Humana, Unicare, UnitedHealthcare, and more.

Also, because of the high deductible amount, many HSA participants also elect to enroll in supplemental accident plans, which help to protect them in the event of an accident. These supplemental plans are generally very affordable and worth the extra expense.

Again, it is important to note that individuals and families wishing to enroll in HSA plans need to act by November 13, 2009 in order to receive a tax deduction for 2009. These individuals and families should consult with a health insurance specialist for assistance finding the best plans for their particular needs.

About the Author: By Wiley Long – President, HSA for America–savings– – The nation’s leading independent health insurance agency specializing in individual and family HSA insurance that works with a Health Savings Account.

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