Health Savings Account-Health Savings Account Info

People who have a Health Savings Account (HSA) benefit from lower health insurance premiums and reduced income taxes. But the best long-term benefit for many will be the large amount of money they will have in their Health Savings Accounts as they enter their retirement years. The best way to build up a significant amount in your HSA is to fund it every year, get a good return on your money, and avoid making withdrawals. And the easiest way to avoid withdrawals from your HSA is to stay in healthy.

People have much more control over their health than most of them realize. If you want to take more personal responsibility for your health, forget your New Year’s “Resolutions” (if you’re like most, you probably already have!), and make some real goals to improve your health and prevent future degeneration.

You Have the Power

The first step in the journey towards optimum health is to realize that you, indeed, do have the power to influence your health as you age. While the genes you inherited from your parents do affect your risks, for most diseases this influence is tiny compared to the role your lifestyle plays.

Here’s the way it plays out for the average American: by the time they are in their 30′s or 40′s, most are on at least one regular prescription drug – typically cholesterol medication, blood pressure medication, and/or Viagra. By their 60′s, most people are falling apart, on multiple medications, and suffering from arthritis pain, obesity, depression, insulin resistance, and a host of other complaints. Within 10 years, many are dropping like flies.

But of course it doesn’t have to be this way.

Imagine the Future

How do you imagine your life playing out? Pour yourself a beer (do it now, before we get to the part where we actually write out lifestyle goals), kick back, relax, and dream. Imagine that you’re 70 years old. Are you still in vibrant health, playing tennis, running on the beach? Or are you old and fat, with just enough energy to get off the couch and make it to the refrigerator and back during the Wheel of Fortune commercial?

Then imagine checking your Health Savings Account balance. Does it have $325,000 in it, or $325? If you’re not in the best health, chances are your HSA won’t be either.

If that’s too far in the future, just imagine January 2009, and where you’d like to be. It’s mostly your choice.

How Are You Going To Get There?

Once you’ve imagined the perfect future, its time to get serious about getting there. And the key is to focus on lifestyle habits, not end results.

Diet

Nothing is more important to your long-term health than eating a healthy diet. So your focus, as much as possible, should be the quality of your diet.

Base your diet on real, whole, unprocessed foods. Fruits, vegetables, fish, lean meat, nuts. Until 10,000 years ago, humans did not have access to bread and potatoes, and it is only in the past 100 years that we’ve begun eating high quantities of sugar, corn syrup, white flour, and other modern foods.

If losing weight is one of your objectives, going on a diet is NOT the answer. Chances are you’ve tried that before, and you know it doesn’t work. But what does work is permanently changing your eating habits, and where most people get stuck is they start out with a feeling of denial. Whether its wings and beer, or Twinkies and root beer, whatever you eat that’s gotten you to this point is probably what you feel like you “deserve” to eat, and you may feel that its not “fair” that you won’t get to eat this way anymore.

Get over it. The fact is that no one eats that way without consequences. Instead, choose to eat good food. Not temporarily, or just until you lose the weight. Don’t tell anyone that you are “on a diet”. Tell them that this is the way you eat, period.

Exercise

We are built to move, and anyone can improve their body’s functioning by moving more. The basics: muscle strength, cardiovascular fitness, and flexibility.

Here’s what your prescription should be:

1. Lift weights 3 times per week. Join a gym, or simply buy some 20 and 30 lb dumbbells. Each week make sure you work out your arms and shoulders, chest and back, and legs.

2. Do something aerobic 3 times per week, for 20 minutes or more. Don’t just go for a stroll, but actually do something that makes you breathe hard – whether it’s jogging, rollerblading, basketball, or whatever.

3. Stretch every night. 5 minutes or less ought to do it.

The Power of Written Goals

So at this point you should have two ideas in your head. One is a picture of you at some point in the future. How you look, how you feel, and how you function. The other is the permanent lifestyle changes you plan to implement to get you there.

Now is the time to put it on paper. This is a powerful exercise that will make your thoughts more “real,” and more likely to come to fruition.

First, write out a detailed description of your future, exactly as you would like it to be.

Then write out your lifestyle habits in positive wording. What kind of food are you going to eat? What kind of food are you going to have around the house? Where and when will you eat out, and what kind of food will you order?

Remember, it is very difficult to make changes if you have feelings of denial. Fighting hunger is virtually impossible. Instead of concentrating on what you won’t eat, concentrate on what you will eat, and on the end result. And if you want to splurge on some Ben and Jerry’s occasionally, go ahead.

How Much Will You Have In Your HSA When You Retire?

In 2008 the maximum annual HSA contribution is $5800 for families. If a family makes the maximum contribution each year, gets an 8% return on their money, and has $500/year in medical expenses, they’ll have $261,885 in their HSA after 20 years. If they have $3000/year in medical expenses, they’ll only have $138,354 after 20 years.

Stay healthy, get wealthy. They certainly go together. And with looming Medicare insolvency, you will certainly want to have as much of your own money available to pay future medical expenses when they do happen.

At one time it wasn’t uncommon for me to have wings and fries for dinner, washed down by a few beers. At other times it was beer for dinner, supplemented by a few wings. Amazingly, the human body is able to take these raw ingredients, and produce heart, lungs, eyes, and everything else that keeps us going. But if we were able to look more closely, we’d see poor ingredients produce a poorly functioning body.

If optimum health hasn’t been a focus in your past, make 2008 a year of change. You’ll be glad you did.



By: Wiley Long

About the Author:

Lana Leming

Michael Moore’s new movie SICKO is a humorous and at times emotionally moving look at the state of U.S. healthcare, but it promotes a solution (government healthcare) that would only make matters worse. Instead of more bureaucracy and government control, we should be encouraging competition among healthcare providers and personal responsibility among consumers. Health savings accounts, or HSAs, do just that, and are the future of healthcare in America.

Many people believe that a government take-over of healthcare coverage, called a “single-payer” system, is the answer. But if one simply looks at the countries that currently have single-payer systems, it is quite apparent that they are failed systems, with the citizens of these countries clamoring for change.

Because demand goes up when prices go down, the only way a government that provides “free” healthcare can control cost is by limiting access. So citizens in countries with single-payer systems always suffer long waits and lack of access to medical care and technologies.

For instance, in Canada there are currently over 800,000 people on waiting lists for medical procedures. The wait time for people who are referred for surgery is very long and can sometimes take over six months! If it weren’t for the fact that thousands of Canadians come to the U.S. each year for treatment, the average wait times would be even longer.

Per capita, Canada only has 20% the number of MRIs that the U.S. has, and only 14% as many CAT Scans. There are hundreds of prescription drugs available in the U.S. that are not yet available in Canada as they try to control costs.

The situation in Britain is no better, with over 1 million people currently on waiting lists. In June Britain’s Health Department found that 13% of patients wait over a year for scheduled surgery, and shortages are forcing more than 50,000 operations to be cancelled each year.

Waiting for surgery is not just an inconvenience; it can mean the difference between living and dying. For instance, in the U.S. the survival rate for stage 1 colon cancer is 90%; in Britain it is 70%. American women diagnosed with Stage I ****** cancer have a 97% survival rate after 5 years; in Britain it’s only 78%.

As Americans contemplate copying these failed systems, citizens in Europe and Canada are headed in the opposite direction. Germany just recently passed laws to enhance insurance competition, Sweden has begun privatizing some of its healthcare, and millions of Europeans are finding ways to opt-out of their government healthcare systems.

In Britain there are now over 6.5 million people who carry private insurance, despite the availability of “free” coverage from their NHS. Another 250,000 self-fund each year for acute private surgery, because they don’t want to or cannot afford to wait. Even the Labour party now favors privatization of healthcare in Britain.

In 2005 the Canadian Supreme court issued a ruling which stated, “The prohibition on obtaining private health insurance… is not constitutional where the public system fails to deliver reasonable services.” Private healthcare clinics are now opening in Canada at the rate of five per month.

Unfortunately, under a socialized system, your body and your life are no longer under your control.

Isn’t it amazing that some of the same people who criticize government ineptness – including Katrina, the many screw-ups in the war on terror, No Child Left Behind, and more – actually think the government would do a good job managing the nation’s healthcare?

Freedom, choice, and innovation are what have given us the highest quality healthcare in the world. We absolutely do need change, but the answer is less government intervention, not more. By encouraging consumer-driven solutions, competition, and price transparency, we can help avoid the healthcare disaster that government control would bring.

One big part of the solution that is already beginning is the adoption of Health Savings Accounts. Over five million Americans already have an HSA set up, and over five billion dollars is already invested in these special bank accounts.

People who have an HSA can set aside money to pay for future medical expenses, and get a tax deduction to do so. Because you must have a high-deductible health plan to contribute to an HSA, these plans encourage people to more carefully spend their healthcare dollars, since money they don’t spend stays in the HSA.

The result is that medical providers once again are competing for customers by lowering prices, and increasing quality and convenience. Already we are seeing plummeting prices on prescription drugs, and low-cost medical clinics spring up in Wal-Mart and other retail locations.

As more and more people obtain HSAs, we will not only see a benefit for the consumers, but we will also begin to see more people who take a proactive attitude when it comes to their health. A Health Savings Account owner who exercises and eats right will likely have a much larger balance in their account by the time they retire.

These changes will result in a healthier and wealthier group of retirees and a smaller burden on our tax system in the future.



By: Wiley Long

About the Author:

Timothy Robotham

HSA is designed and introduced to reduce the health care cost for both employers and employees. Health savings account (HSA) is tax privileged savings plans offered to taxpayers in the United States to deposit money to cover current and future medical expenses.HSA provides tax-free savings account for medical expenses and introduced to reduce the current healthcare costs.

HSA is passed by congress in the year 2003, which is a tax-free savings account. It covers both individual and group health insurance. These savings are utilized for normal and customary expenses, like routine health checkups, doctor’s visits, and etc.In addition to the tax free savings HSA are more portable. Since you are not coupled with any particular medical group or doctors, you can pick yours.

Health Savings Account offers a new feasible alternative to Medical Savings Account (MSA).HSAs can be used with health plans with decreased minimum deductibles. HSA can be used with minimum deductibles. HSA and MSA vary in several ways. Notable variation is HSA are offered by employers of all size whereas the MSAs are limited to employers who employed 50 or fewer people.

Both employers and employees are benefited through Health Savings Account (HSA), but the deposit should not exceed the limit, proposed by Federal law .Employers can discriminate between full-time and part time employees, and/or family and single coverage.

HSA are analogous to IRAs, you can get same benefit as with IRA’s.In the HSA there is no age restriction and qualified medical expenses are never taxed. But in the IRAs money may be taken out without penalty at age 65.At the same time penalty for non-medical withdrawal before age 65 are usually severe.

Benefits: The HSA plans are blend with a high-deductible plan. It provides tax free medical expense. It facilitates employees become better health care consumers. The accumulated savings are owned by the individual and can move from employer to employer. There will be free of tax for the employers’ contribution.



By: Janani

About the Author:

Ervin Hegan

“Consumer driven healthcare” is the name that has been given to the change that is currently happening in the medical marketplace. As millions of people get Health Savings Accounts, medical providers are having to adapt to the new reality of people spending their own money when purchasing healthcare. As more companies compete for your business, the opportunities to save money will continue to grow.

Since the advent of employer-sponsored health insurance during World War II, the pricing and quality of medical services has been shrouded in mystery. As the real price for computers, organic food, big-screen TV’s, and just about everything else has continued to drop (including health services where there is not a third party payer, such as laser eye surgery, contact lenses, over the counter medication), the price of healthcare has continued to rise. But that is finally beginning to change. And you, fellow HSA-owners, are the reason.

To gain a competitive advantage, healthcare providers have traditionally attempted to grow local market share in an attempt to extract higher payments from insurance companies. But since Health Savings Account owners have the ability to accumulate unspent funds and invest them tax-free, those of us with a Health Savings Account have a strong incentive to avoid unnecessary care, and to be more cost conscious when we seek treatment.

There are now billions of dollars in Health Savings Accounts, and healthcare providers want access to that money. And since you control it (instead of the insurance company), the only way for the provider or retailer to get that money is to offer you high quality care at a price you are willing to pay. And dozens of companies are doing just that.

The Market Responds

One obvious response to the consumer-driven healthcare movement is the proliferation of quick-service medical clinics. These clinics, which require no appointment and typically charge less than $50, offer a low-cost way to diagnose and treat strep throat, bronchitis, pink eye, and other common ailments. MinuteClinic operates dozens of locations in Target, Cub Foods, and CVS Pharmacy stores. Wal-mart, which currently has 75 in-store clinics in 12 states, is forecasting more than 6,600 in-store medical clinics will be open in retail stores within 5 years.

Diagnostic labs, which have traditionally sold their services to physician’s offices, are now offering tests directly to the public at prices often 70% less than you would pay at a doctor’s office. With most you can order the test online, go give blood, and get your results in a couple days.

Companies are even providing self-testing services and devices which can enable you to avoid going to the doctor when minor medical events occur. One of the most common reasons kids see a doctor is because of a possible ear infection. For about $50 you can buy an EarCheck Middle Ear Monitor. This uses sonar to test for fluid behind the eardrum, which may indicate an infection. “The QuickVue Strep Test” which costs less than $4 per test in a pack of 25, can quickly help you determine if your child has a strep infection, which would require a doctor’s visit, from a common viral infection, which would not.

Demand Price Transparency

Health Savings Accounts reward personal responsibility in three ways: 1) they reward you with tax-breaks for putting money aside to cover future medical expenses; 2) they reward you for taking care of your health by enabling you to grow your account; and 3) they reward you for being a cost-conscious and discerning consumer.

So be a discerning consumer, and spend your money wisely. Remember that the doctors and healthcare providers you see work for you. If you don’t get the quality of service or a fair price, take your business elsewhere. Here are some common sense suggestions to make sure you do get a good price:

1. Ask how much it will cost, before you buy. There is nothing else that you buy without knowing the price up front, so don’t feel intimidated to ask your doctor the same.

2. Review your bill before paying it. You might be shocked how often extra charges are “accidentally” tacked on to hospital bills.

3. Ask for a cash discount. To avoid the hassles of filing for insurance and trying to collect past-due charges, most physicians will gladly offer a cash discount if you ask.

4. Explain that you will be paying out of your own pocket. When a doctor is prescribing tests or writing prescriptions, he or she is rarely taking cost into consideration. The American Journal of Preventive Medicine recently reported that up to $63 billion in medically unnecessary tests are ordered every year.

5. Vow never to pay list fees. Doctors and hospitals routinely discount their services to insurance companies and PPO organizations. As a cash-paying customer, you should get the best price available.

For many years, a small group of health economists and other policy-makers pushed for a more market-based approach to healthcare. They correctly argued that healthcare was like any other market and that if you put a true price on health care services and let the market function, costs could be controlled. We are now beginning to see this happen.

Our healthcare system is the best in the world. It is a dynamic and complex work in progress, which can only get better as the consumer gets involved. So be savvy about how you spend your healthcare dollar. And watch those unspent funds in your Health Savings Account continue to grow.

The Medicare Trust Fund will soon be out of money, and there will be no practical way for the government to continue to provide the level of benefits that current Medicare recipients receive. The result will be serious rations, waiting periods, and a reduction in benefits. If you wish to maintain your medical freedom, and have access to a high level of medical service, you must be prepared to pay for it yourself. The best strategy is to take good care of your health, and to build up your medical retirement fund as large as possible by using a Health Savings Account.



By: Wiley Long

About the Author:

Lenora Gavula

By choosing a Health Savings Account, one is betting on themselves… in a way. If you stay healthy, then with a typical health insurance plan you’re just out a lot of money. With a Health Savings Account, not only will you pay significantly less in premiums, but at the end of the year you have a nice deposit of up to $5,650 sitting in your account. Money which you didn’t pay any federal income taxes on, state income taxes (with the exception of four states) on, or social security taxes.

Let’s say a 30-year old man with a family opens a Health Savings Account and has a high-deductible health plan that allows him to fund the account with $5,650 each year. If he takes $1,000 or less out each year for medical expenses, and earns a 10% return on his money, he’ll have $1,422,878 when he retires.

The best way to accumulate this much money in your Health Savings Account is to stay healthy, so that you don’t need to access those funds to pay for medical expenses. The good news is that the vast majority of diseases and disorders people have are the direct result of their lifestyle choices. High blood pressure, cancer, diabetes, Alzheimer’s, digestive disorders, endometriosis, osteoarthritis, osteoporosis, and more, are all largely preventable.

The Average Guy Doesn’t Get It

The average American lives as if social security, a few prescriptions, and some good luck will take care of him in his later years. So he saves little for retirement. He eats packaged foods like French fries, chips, cokes, pasta, and cold cuts. And over the years he puts on “a few extra pounds”, and he gets out-of-shape, and he gets high blood pressure, and high cholesterol, and eventually heart disease, cancer, diabetes, or Alzheimer’s.

Insurance Companies Get It

Some insurance companies do understand the tremendous impact lifestyle can have on health, and are beginning to institute programs to encourage healthy lifestyles among their customers. Healthy policyholders will use their coverage less, resulting in lower rates for them, and better customer retention and higher profitability for the insurance company. Some insurance companies started new programs designed to help reward their customers for staying healthy. The programs provide health risk assessments, personalized health-improvement plans, email access to trainers, counselors, and nutritionists, and even credits that can be redeemed for health-related merchandise.

HSA Owners Get It

People who open Health Savings Accounts are proactive. They act ahead of time, and think about how their actions now will affect their future. That is why they put away tax-deferred money for future possible health expenses, and that is why many are also interested in taking a proactive approach to their health. Choosing to live an extraordinarily healthy life, and actively making lifestyle changes, is an activity that will bring tremendous returns. Tax-free, just like an HSA.



By: Wiley Long

About the Author:

Lon Ko

A Health Savings Account can be an important part of your tax and money-management strategy. Not only can you reduce your health insurance premiums, but when you fund your account you get a nice tax break. If you stay healthy, that money grows tax-deferred like an IRA, and can amount to a lot of money in retirement.

Every year around this time you should assess your finances and see what you need to do to optimize your situation. Making the most of your Health Savings Account (HSA) is one area that can really make a difference. Here are the key things you need to know to get the greatest tax reduction and the most growth out of your HSA.

Maximizing Your HSA Contribution May Reduce Your Taxes By $1836 or More

If you own an HSA-qualified health insurance plan that has an effective date no later than December 31, 2007, you qualify to make a tax deductible contribution to your Health Savings Account. This will immediately reduce your tax bill come April 15.

The contribution limit is not pro-rated based on the number of months in 2007 in which you had coverage, as it was in the past. However, you do need to remain an HSA-eligible individual throughout 2008, or the extra amount contributed will be counted as income and subject to an additional 10 percent tax.

The maximum HSA contribution in 2007 is $5650 for families, and $2850 for individuals. If you are 55 or older, you may also contribute an additional $800.

Your HSA contribution is deductible on your federal income taxes, and every state (except AL, CA, NJ, and WI) also gives a deduction on state income taxes. So by maximizing their HSA contribution a family in a 28 percent tax bracket, paying 4.5 percent state income taxes, will reduce their April 15 tax burden by $1836.25.

Though your HSA-qualified health insurance must be in place before the end of the year, you do have until April 15 to make your 2007 contribution. Though you cannot put any more 2007 money in if you miss this deadline, you can reimburse yourself in later years for qualified expenses incurred in 2007, even if you do not currently have the money in your account.

Strategic Withdrawals

You can withdraw money from your HSA at any time to pay qualified medical expenses. Keep in mind that this includes over-the-counter medications such as aspirin or cough syrup, dental and vision expenses, and even alternative care such as acupuncture or homeopathy.

One strategy that many of our members take is to save their medical receipts, but to delay reimbursement from the HSA so that the funds have the opportunity to grow tax-deferred. There is no time limit in which you must withdraw the money. Since most people will face larger medical bills during their retirement, it is quite likely that the withdrawals would never be subject to taxes.

If you are not fully funding your Roth, another strategy would be to reimburse yourself for medical expenses from your HSA, and to deposit it in your Roth. Your HSA reimbursement is tax-free, and placing it in your Roth would also give you tax-free growth while enabling you to withdraw the money in retirement tax-free for any reason, including non-medical expenses. You would also avoid any extra state taxes in the states that currently tax HSAs.

Remember to Keep Good Records

You should keep a record of any qualified medical expenses you incur. This will ensure that you have documentation substantiating any tax-free withdrawal you make from your HSA. In order to pay for a medical expense from your HSA, it must be a qualified expense.

You can go low-tech and just put receipts in a file, or get a little more organized and track your records online.

2008 Contribution Limit and Deductible Changes

In 2008 the maximum annual HSA contribution limit will again go up, this time to $2900 for individuals and $5800 for families. Those over age 55 will be allowed to contribute an additional $900 to their accounts.

The maximum deductibles will be going up next year to $5600 for individuals, and $11,200 for families. If you’ve now got some money socked away in your HSA, it might make sense to move to a higher deductible to further reduce your premiums.

Health Reimbursement Arrangements

If you are currently set up as an S-corp, you should strongly consider setting up a Health Reimbursement Arrangement (HRA). An HRA enables your S-corp to reimburse you as a tax-free fringe benefit for the cost of your individual health insurance. This is the only way an S-corp can legally pay for individual health insurance, and is saving our average S-corp member over $3000. The HRA must be established by December 31st in order to take advantage of it in 2007.

It may also be beneficial to set up an HRA if you have a spouse who works in your business. Also, many small businesses use an HRA to reimburse their employees for individual health insurance premiums (which is much less expensive than getting group coverage). More information and a simple online application is available on our Health Reimbursement Arrangement page.

What to Do Now

Here are the steps you should take now:

1. To maximize the potential growth of your funds, you should try to fund your account as early in the year as possible. Every month of tax-deferred growth does add up over time. You can keep the money in a savings account, or invest it in stocks or mutual funds.

2. If you have your health insurance in place but do not yet have your HSA set up, you can do so online or possibly your local bank.

3. If you do not yet have an HSA-qualified health insurance plan, you should apply for coverage as soon as possible. Your plan must be effective before January 1 in order for you to qualify for the 2007 tax deduction. By getting your HSA-qualified health insurance in place by January 1, not only will you be able to maximize your tax benefits, but you also may be able to lock in 2007 rates for the next 12 – 24 months.

4. If you have a small business with employees, are set up as an S-corp, or have a spouse who works in the business with you, you should set up a Health Reimbursement Arrangement.

Through HSAs and HRAs, individuals who pay for their own health insurance have some powerful tax reduction strategies at their disposal. December 31st is the deadline for obtaining 2007 tax deductions, so you should act quickly if these ideas make sense for your situation.



By: Wiley Long

About the Author:

Alesia Lane

Health Savings Accounts consist of two parts – the high deductible health plan (HDHP), and the Health Savings Account (HSA) itself.  By carefully choosing which bank you use to establish your HSA, and strategically choosing how to fund your account and manage your investment, you will be able to get the most return on your money while keeping your expenses to a minimum.

Make Sure to Establish Your Health Savings Account

By switching from a conventional copay health insurance plan to a high-deductible health insurance plan (HDHP), most people are cutting their health insurance costs by about 40% or so.  This is such a big savings, that many people neglect to take the next step and set up their HSA.  But this is a financial mistake that is costing them money.

Unless you pay no income tax and have zero medical expenses (including dental, over-the-counter medications, or charges for alternative care like chiropractic or acupuncture), you will absolutely save money by establishing your HSA.  Just find a good HSA Administrator and get started. 

Run All Your Medical Expenses Through Your HSA

Not everyone feels like they have “extra” money that they afford to set aside in their HSA, despite the tax savings and other financial benefits.  Even if that’s the case, you should still establish your HSA.  Every time you incur a medical expense, deposit at least as much money as you spent on that medical expense.  For instance, if you went to the dentist and it cost $85, put $85 in your HSA.  If you like you can then take it right back out.

What this does is convert this medical expense into a tax-deductible expense.  Then when you file your taxes next year, you can put the total amount that you ran through your HSA on line 25 of your 1040, and deduct it from the total income you report.

Cover Your Deductible

Your next step is to get enough money in your HSA to cover your deductible.  For 2008, deductibles range from $1100 to $5600 for individuals, and $2200 to $11,200 for families.  Annual contribution limits are $2900 for individuals, and $5800 for families.  So it could take a couple years or longer to get enough money in your account to cover your deductible.

Once this money is in your HSA, you will have the confidence of knowing that you can cover most any medical expense that comes your way, particularly if you have a health insurance plan that pays 100% after your deductible.

As you continue to build money in your account, you may want to consider switching to a health insurance plan with an even higher deductible, which will further lower your premiums.

Minimize the Fees You Pay

If you will be using your HSA to pay medical expenses as you incur them, you should keep an eye on the fees your bank charges.  Until you have enough money in your account to cover any fees with investment returns, you probably want to have your HSA with a bank that charges no fees.  (Several are listed on the website referenced above).

If you plan to access money from your HSA to pay ongoing medical expenses, you may wish to keep a portion of your HSA money in a savings account or short-term CD.  But to take maximum advantage of your HSA, you’ll want to eventually move some of the funds to investments that have a higher potential return.

Investment Options

No other investment has the triple tax-advantage that Health Savings Accounts offer.  Not only is your Health Savings Account deposit tax deductible, and your withdrawals to cover medical expenses tax-free, but your investment also grows tax-deferred make Health Savings Accounts a great investment option.

Taking advantage of tax-deferred growth is one of the best ways to build long-term savings. Some banks will provide a short list of mutual funds you can invest in, while others provide access to an online discount brokerage such as Ameritrade where you can choose from stocks, bonds, mutual funds, and more.

The most aggressive strategy is to pay your medical expenses from somewhere other than your HSA, and save the receipt.  You can then reimburse yourself at a later date.  The additional growth you get from not paying any taxes on your investment may be enough to cover all your medical expenses.



By: Wiley Long

About the Author:

Gordon

One of the best aspects of having a Health Savings Account is that you can control your medical care. If you want to have a medical test or procedure done that is not covered by your health insurance, you pay for it with pre-tax money from your health savings account. One of the processes of aging that scientists have been learning more about in recent years is glycation, and the formation of Advanced Glycation Endproducts, or AGEs. Here’s how to reduce this harmful process, and a simple test you can pay for from your Health Savings Account to see how you’re doing.

What is “Glycation” and what are AGEs?

When we take a piece of bread and put it in the toaster, it slowly turns brown. This is the result of a natural process called the “Maillard reaction”, in which sugars react with proteins. It is this process that gives flavor to beer, pizza crust, and roasted coffee.

The same process naturally happens in the human body. (So in a sense, we all slowly “brown” as we age). When a protein in your body is “glycated”, it has a sugar molecule attached to it, and can then bond to another protein in your body in a process called “cross-linking”. These damaged proteins result in the formation of Advanced Glycation Endproducts.

Exposure to AGEs in the body contributes to inflammation and to a large variety of age-related diseases, including cataracts, joint stiffness, Alzheimer’s disease, and cardiovascular diseases. Some AGEs increase the risk of auto-immune diseases such as rheumatoid arthritis, and others increase the risk of cancer.

Reduce AGEs in your Food

When experimental mice are fed a low-AGE diet, they have better cardiovascular health, better kidney health, better blood sugar management, and they live longer. AGE formation is increased when foods are cooked at high temperatures, and for longer periods of time. You can significantly reduce AGEs created in food preparation by using boiling, poaching, or stewing rather than frying or grilling.

So one strategy is to simply reduce your consumption of “browned” foods. So for instance, fried shrimp will have way more harmful AGE compounds than boiled shrimp.

How to Reduce AGE Formation in your Body

AGE formation is particularly high in diabetics, due to uncontrolled sugar levels in the body. This is one of the reasons why they suffer from increased rates kidney disease, vision loss, and cardiovascular disease.

Millions of Americans who have not been diagnosed as diabetic still have glucose handling difficulties, typically diagnosed as “metabolic syndrome”. It is becoming more and more evident that a diet low in foods that raise blood sugar rapidly (typically the “white” foods like bread, pasta, rice, and sugar) will reduce a person’s risk of diabetes or metabolic syndrome. This in turn will also reduce your body’s AGE formation.

Supplements You Can Take

Numerous dietary supplements have now been shown to reduce glycation, cross-linking, and AGE formation. Some experts recommend the following supplements, typically 500 mg to 1 gram of each, per day:

* Carnosine

* Benfotiamine

* Alpha-lipoic acid

* Acetyl-l-carnitine

* Curcumin

If your health care practitioner recommends supplements for the prevention or treatment of a specific health condition, you can pay for them from your HSA.

A common blood test that diabetics have done is Glycated Hemoglobin A1c. This measures how much the red blood cells have become glycated over the past one to three months, and is seen as an indicator of average blood sugar levels.

Stay Healthy, Grow Your Health Savings Account

So be proactive – fund your HSA to the max, do what you can to optimize your health, and let your account grow.



By: Wiley Long

About the Author:

Janeth Looker

December 1st is the deadline to secure substantial savings on your current year taxes through a Health Savings Account. With the upheaval in our economy, there has been quite a surge in the number of people applying for HSA-qualified health insurance plans. Health Savings Accounts allow you to put aside pre-tax dollars to pay for future medical expenses. Anyone that has an HSA plan in effect no later than December 1st is qualified to make a tax deductible contribution to their HSA during the current year, and may be able to reduce their taxes on April 15th by $1900 or more.

While conventional co-pay plans continue to be popular, there has been a large increase in the number of people choosing to invest in health plans that work with Health Savings Accounts. HSA plans have become a better choice for many because these plans have premiums that are usually quite a bit lower than conventional co-pay plans. HSA plans also come with the added incentive that any money deposited into the HSA is tax deductible, which will directly lower the plan holder’s taxable income. A growing number of people are finding that a Health Savings Account is both a wise investment and a valuable way to meet their health insurance needs.

In addition to lowering their taxes and reducing their premiums, Health Savings Account holders are also able to begin building a tax-deferred medical retirement account. These accounts have proven their value for people who have built their accounts and later experienced unexpected medical issues. Rather than having a large amount of out-of-pocket expenses, these people were able to make a withdrawal on their HSA tax-free to cover the unexpected medical bills. Any growth to this account is tax-deferred and if a withdrawal is made for just about any kind of medical expense, that withdrawal is made tax-free.

If you have seriously considered making changes to your current health care arrangements, now is the time to act. At the very least, you could start your own investigation to see if an HSA would be a wise decision for you and your family. You must have your HSA-qualified health insurance in force no later than December 1, in order to take advantage of a 2008 HSA contribution and receive the accompanying tax reduction. Due to the fact that the underwriting process can sometimes take a few weeks, most insurance experts recommend that you apply for a plan as early as possible.

Anyone who does have a plan in place before December 1 will be able to contribute up to $2,900 as an individual, or up to $5,800 as a family to their Health Savings Account. People over the age of 55 can also make an additional contribution of up to $900 to their account. All money placed in these accounts, up to the limits just stated, is not subject to taxes. Someone in a 28% tax bracket who makes a $5,800 contribution to their Health Savings Account will reduce their April 15th tax bill by $1,624-even more when they count the savings on their state income taxes.

If you are paying for your own health insurance, now is the time to investigate HSA plans. Online insurance agencies make comparing premiums and applying for coverage simple, and the lower premium and reduced taxes could add up to $4000 or more in annual savings.



By: Wiley Long

About the Author:

Coral Shallcross