HSA for America offers tax-favored health savings account (HSA) strategies to help manage out-of-pocket medical costs while reducing taxable income and improving eligibility for Affordable Care Act (ACA) health tax credits.
“Choosing an HSA-qualified health insurance plan can actually reduce your taxable income and put you in a better position to qualify for health tax credits under the Affordable Care Act,” explains HSA for America co-founder and webinar host Fred Adams.
An independent insurance advisor for 25 years, Adams explains how contributions to an individual HSA before December 31, 2013, can actually lower the account holder’s taxable income. This tax-favored strategy not only results in lower tax bills, but provides a tax-free fund for use in paying out-of-pocket medical expenses such as deductibles and copayments for health care.
“Another great advantage of contributing to an HSA,” says Adams, “is the ability to improve your chances of qualifying for a tax credit (premium subsidy) when enrolling in a new health care plan under Obamacare.”
People who purchase new health insurance coverage in 2014 will choose from Bronze, Silver, Gold and Platinum plans. A family earning less than 400 percent of the federal poverty level will be required to pay no more than 9.5 percent of their income for the second-least-expensive Silver plan.
In 2014, that limit is $94,200. A family of four earning $100,000 would therefore not qualify for any tax credits, and they would be responsible for the full amount of the premium, as well as any deductibles, coinsurance and copayments.
If this family obtains an HSA-qualifed health policy and funds their account with the fully allowable $6,450 each year, they would be able to lower their income to below $94,200, and thus qualify for tax credits that would limit their premium.
According to Adams, contributing to an HSA can have a tremendous impact on out-of-pocket maximums. “Adjusted gross income as a result of HSA contributions not only affects eligibility for the Obamacare subsidies,” Adams explains, “but it has a direct effect on what you’ll pay for deductibles and copayments before your 100 percent benefit coverage kicks in.”
For instance, the maximum out-of-pocket expenses on a new ACA Silver plan for a two-person family earning $31,020 would be $10,400. By reducing their adjustable gross income by just one dollar, their maximum out-of-pocket drops to just $4,500.
HSA for America encourages its clients to contribute the maximum allowable amount each year to their accounts. In many cases, HSA for America advisors have reported that these accounts have been able to virtually pay for themselves. The company illustrates how a family earning $37,469 could contribute $6,450 to their HSA, and in doing so reduce their out-of-pocket maximum by $5,900, an amount almost equivalent to their HSA contribution.
Tax credits on health insurance plans starting in 2014 will be based on expected 2014 income. But you still want to minimize 2013 income for tax purposes, and there is still time to get a plan for 2013. Those who are not yet enrolled in an HSA-qualified plan, but are interested in gaining the benefits of an adjusted 2013 income need to enroll in an HSA plan with an effective date of December 1, 2013.
“Even if you are not sure whether you will qualify for a tax credit, you should still maximize your HSA contribution in order to lower your tax bill come April 15,” Adams reminds clients. “Putting money away to protect yourself and your family from future medical expenses is simply a smart thing to do.”
About HSA for America
As the nation’s leading independent HSA expert, HSA for America has earned a reputation for providing superior educational resources for individuals, families and small businesses. With its comprehensive website, the public can evaluate high-deductible health insurance plans that allow them to establish an HSA and comply with the health care reform mandate.
Guidelines for selecting an HSA administrator based on fees and investment options are readily available at http://www.HSAforAmerica.com/admins.htm. More topics to help consumers maximize their savings can be found at http://www.HSAforAmerica.com/The-HSA-for-America-Complete-Protection-Strategy.htm.
Consumers may access HSA for America’s instant quote engine and online applications or request individualized assistance. Confidential consultations regarding HSA plans may be arranged by calling 1-866-749-2039 from 9 a.m. through 11 p.m. Eastern.
Learn more to save more!
Join us for our upcoming HSA webinar on October 15. You’ll hear from one of our HSA experts on how you can reduce your taxes and possibly qualify for health tax credits by contributing to your HSA this year. You’ll get expert advice on how to save in 2014!
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.