What if you could build equity in an investment that helped you with health care? Equity in your home is the difference between your property’s value and the mortgage balance(s) against it. You’re going to be making monthly payments on your home mortgage for around 20 to 30 years. You’ll probably be making monthly payments on health insurance even longer. If you can keep up with the mortgage, you’ll own the home.
No matter how long you pay on health insurance, you’re never going to own anything that guarantees full payment for all your health care. Isn’t that a reason to keep your health insurance premiums as low as possible? Of course, you don’t want to sacrifice your access to health care with an ineffective policy. What if you could get decent coverage and build up equity at the same time?
Health Savings Account plans offer the standard kinds of benefits that traditional health insurance does, and HSA plans have premiums on the low end. Since these plans let you save with tax-free earnings, they are the only type of health insurance that lets you build equity in your health care. There is no other investment that offers a tax deduction now along with a tax-deductible withdrawal in all of the years to come. Health Savings Account plans help you pay for things like braces and homeopathy that insurance plans don’t cover. They help by basically cutting your taxes so you have more money available for health care.
HSA deposits are not taxable, and you can shelter up to $7,250 from taxes for 2012. That’s the largest deposit allowed, and it’s for a family headed by someone who is at least 55 years old. They can shelter an extra $1,000 to help them prepare for retirement. Other HSA family plans permit sheltering up to $6,250 this year, but that’s higher for 2013.
Unlike standard health insurance premiums that are gone forever, your HSA savings are real equity in health care. November is the final chance to get an HSA-qualified plan that would allow you to claim a tax deduction for 2012. Your policy must have an effective date of no later than December 1, 2012. Of course, you can start an HSA and reduce your taxes for 2013 next month.
That tax-sheltered money and the income it earns are your property. Until you retire and sign up for Medicare, you can use HSA money to pay for health care for you and your family. You can keep doing that during retirement, or start paying taxes on HSA withdrawals and spending the money for things completely unrelated to health care. Either way, HSA plans are an opportunity to get more for your investment in health care.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.