Health Savings Accounts

If you are considering changing your health insurance

policy, you should be aware of the alternative of a

Health Savings Account (HCA).

Health Savings Accounts started to become available

(and legal) in 2004, allowing people with

high-deductible insurance policies to set aside

tax-free money to fund medical expenses up to the

maximum deductible amount.

If you don抰 have to use the funds, it rolls over

every year. Once you reach age 65, you no longer are

required to use it for medical expenses, although you

certainly can; you can withdraw funds under the same

conditions as a regular IRA.

Although you will be penalized if you use the funds

for non-medical expenses prior to age 65, you can use

the money for vision care, alternative medicine or

treatment and dental care.

For 2008, an individual may fund up to $2,900 tax

free. The maximum deductible would be $1100 and the

maximum out-of-pocket cost would be $5,600.

For a family, the maximum tax-free contribution is

$5,800 with the maximum deductible of $2,200 and the

maximum out-of-pocket cost would be $11,200.

Health Savings Accounts are certainly a viable way to

shelter income while providing catastrophic insurance

coverage in light of the high cost of low-deductible

health insurance plans.

For healthy people, it deserves some research. Consult

with your insurance agent for all of the details

involving this approach to managing your insurance

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