As 2011 W-2 forms and 1099s start arriving in mailboxes throughout the country, now is a good time to make sure you understand how to get the most bang for your health insurance buck.
At U-Haul Dealer Benefits, we offer a wide range of major medical insurance plans, including Health Savings Account (HSA) plans that provide important benefits under the federal tax code. We recommend HSA plans for Dealers and employees who want to keep their monthly health insurance premiums low and pay for their budgetable health care expenses with pre-tax dollars.
HSA plans make sound financial sense because they enable Dealers and employees to save tax-free for their current and future health care needs. An HSA lets you put your money into your own tax-deferred Health Savings Account rather than sending the insurance company more premium dollars than you need to each month, dollars you will never get back.
Over ten million people now have HSA plans, according to Americas Health Insurance Plans (2011 survey).
Savings deposited into an HSA grow tax-deferred and can be withdrawn tax-free as long as the HSA dollars are used for qualified medical expenses, which include health care expenses that come under your insurance deductible and co-pays, as well as vision, dental and other health care expenses that are not covered by health insurance.
For 2011, HSA contributions are tax deductible up to $3,050 for individuals and up to $6,150 for families. HSA plan insureds who are 55 and older can deduct an additional $1,000. In 2012, tax-deductible contribution limits have been increased to $3,100 for individuals and $6,250 for families.
If you already have an HSA plan, you have until April 17 to contribute to your HSA and to maximize your 2011 deductions, up to the legal limit.
Unspent HSA savings accumulate year after year, earning interest. This helps you build up a health care nest egg that can be vital if you have a year of high health care expenses.
The idea is to build up enough money in your HSA to cover health care expenses under your annual deductible. This allows HSA plan insureds to feel comfortable budgeting for a higher deductible and in turn get lower monthly premiums.
Health Savings Accounts have two components: 1) a tax-advantaged bank savings account with a debit card, coupled with 2) a high deductible major medical insurance plan. In addition to the tax savings, an HSA major medical insurance plan has significantly lower monthly premiums compared to traditional health insurance, while still providing quality coverage, including preventive care.
Almost seven in ten (68 percent) pre-retirees told a recent Fidelity Investments® survey that the cost of medical care in retirement is one of their three biggest financial concerns. HSA plans can help here too, since they work like a retirement IRA, but for health care.
Unspent HSA savings accumulate year after year in the account, earning interest, so you can build up funds pre-tax and use them later in life when medical and dental care needs often increase significantly. Once you start Medicare, you cannot make further deposits into an HSA, but you can use the tax-deferred funds you have built up for health expenses that are not covered by Medicare.
To learn more about HSAs, visit the FAQs on the Benefits Program section on the home page of this proprietary U-Haul Dealer Benefits Program website. Then click on the orange Comparison Shop for Medical button to find the top HSA plans in your area (available in most states) and enroll right online. See how an HSA plan can help you save on your health care and taxes.