Chances are, like many other Americans, your health insurance premiums will be increasing in 2017. A recent study from the National Business Group on Health indicated that they will rise 5 percent for businesses. Have you already asked the question “how am I going to pay for the increase” or “how am I going to pay for a high deductible?”
The answer may lie within a Health Savings Account (HSA). An HSA is a savings account that works well with high-deductible health insurance policies because it allows you to save money tax-free to cover qualified health-care costs. Many employers are replacing their current plans with high-deductible plans and creating HSA accounts for their employees, most are also contributing the companies money into the accounts, which is in addition to your contributions.
The funds you contribute to your HSA reduce your taxable income. Also, the money in your HSA grows tax-free and as long as you use the money for medical expenses it can be withdrawn tax-free! Finally, you don’t have to use up the money in the account by the end of the year. Any unused funds just roll over and can be used in subsequent years.
Get the most of your HSA
What many individuals have started to do is not even touch the money in their HSA. They factor in what their medical expenses might be for the year and prepare to pay for them out of pocket. But, they still continue to contribute to their HSA. ($3,350 is the max for 2016 for individuals and $6,750 for families.) They are doing this because if there is a major medical emergency, they have that money to fall back on. Or they save it for when they retire and can then use it to cover their medical expenses and don’t have to take the money from their retirement savings.
If you are looking at health care premiums this year and are a bit baffled by pricing, consider learning more about a health savings account.
A Mazzo Accounting provides a variety of tax and accounting services to individuals and businesses in the Wyomissing, Reading, West Reading, Sinking Spring and Kenhorst areas, as well as towns and villages around the Greater Reading area. Our services for small to mid-size businesses include taxes, payroll services, accounting services, and bookkeeping services. We also provide a variety of services for individuals and they include tax return preparation as well as some accounting assistance.