No, I’m not talking about the federal subsidies for people who don’t qualify for Medicaid. Independent of your gross annual income, you’re entitled to certain tax deductions just for starting a health savings account. If you’re under age 65, one type of health insurance policy can help you save on federal and state taxes. And, it’s legal.
The IRS doesn’t care how much you make or whether you deposit income or other types of earnings in your health savings account. The only qualification is that you have a health insurance policy that’s qualified to work with a Health Savings Account.
Four Benefits You Won’t Get from Other Types of Health Insurance
By starting a health savings account, usually abbreviated as an HSA, you can:
- Claim a tax deduction for what you or relatives contribution to your HSA
- Not have to pay taxes on HSA contributions made by your employer (that’s true if your employer make a contribution to your HSA through a cafeteria plan)
- Make tax-free interest or other earnings on your HSA balance depending on how you invest the money
- Still not pay taxes on money you take out of your HSA when you spend it on qualified health care. To see examples of what’s qualified, just click here.
How Much Can You Shield from Taxation?
That changes annually. For 2013, an individual can deposit up to $3,250 in an HSA. If you set up a family HSA, you can contribute up to $6,450. Once you reach age 55, you’re allowed to deposit an extra $1,000 a year on top of those limits to help you catch up with rising retirement costs.
How Do You Find Health Insurance that Lets You Start an HSA?
Our instant quotes will show you that immediately. You can use them to compare HSA-qualified plans to other types of insurance, too. That’s a great way to compare premiums, but you’ll want to click Plan Details to see the annual out-of-pocket limits, too. That defines how much you could end up spending on health care that’s not covered by your insurance for things like the policy’s deductible, co-insurance and co-payments.
I have been in the health insurance business for over 12 years. I’m passionate about Health Savings Accounts and enjoy blogging about them. I am also a husband and father of 2 beautiful children.