HSA-qualified health insurance plans encourage personal responsibility by giving a tax break to people who put aside money to pay for their own medical expenses. It is up to you to maximize the benefit that you receive.
Fund Your Health Savings Account
You should do everything you can to maximize the contribution to your HSA. There is literally no better way to put aside money than by depositing it into your health savings account. The money is tax deductible when deposited, grows tax-deferred, and - unlike your IRA or 401k - can be withdrawn tax-free if used to pay for medical expenses.
If you do not currently have an HSA-qualified health insurance plan, you must have that plan effective no later than December 1 in order to qualify for a 2010 contribution and tax deduction. Information and online quotes are available on our website.
If you have not yet established a health savings account, doing so is your next step. This is as simple as setting up any other bank account. We have a number of banks that we recommend on the HSA Administrators page on our website. The most popular banks are HSA Bank and HSA Resources, both of which enable you to set up an account online.
You have until April 15th to fund your account for 2010. Individuals can deposit up to $3050, and a family can deposit as much as $6150 into their HSA. Individuals over 55 can deposit an additional contribution of $1000. (If both husband and wife are over 55, the spouse will have to set up an additional account to deposit their additional $1000).
Add Up Your Tax Savings
In case you haven't made up your mind to definitely maximize your HSA contribution, take these numbers into consideration. Someone in a 28% federal tax bracket, paying 5% state taxes, maximizing their family contribution, will reduce their April 15th tax bill by $2029.50. That's like getting a $405 discount on each month's premium between December and April.
If you tend to be healthy and not use the money in your HSA, that's even more reason to maximize your contribution. Taxes can have a devastating effect on the growth of your savings, and all indications are that taxes will be higher in the future than they are now. So the tax-deferred growth of your HSA funds can be a nice supplement to your other retirement accounts.
Maintain Your Health Care Freedom
Radical changes are taking place in our health care system today, and nobody can predict the long-term impacts. The pharmaceutical industry is doing its best to limit competition from the nutrition industry. Physicians are getting laws passed that limit their competition from chiropractors, naturopaths, and other health care practitioners. And of course, many in government are trying to take control of the entire health care system.
Insurance plans are becoming much more regulated, and a majority of Americans will soon be getting subsidized health insurance coverage. Many coverage mandates have already been implemented, and more are coming.
There may come a day where the doctor you wish to see is not on the PPO list of your insurance company. Or the best high-end treatment is not on a list of approved services. The very best protection you have to control your own healthcare destiny - to choose the doctors or type of treatment you receive - is to have money in your HSA. Then, you get to make the decision about what is best for your situation.
Get What You Deserve
We are once again hearing attacks such as "The HSA is the mother of all tax dodges". But if the majority put money aside each year to cover future medical expenses, and then carefully spent that money when it was needed for medical services, imagine the impact!
Encouraging competition, price transparency, and personal responsibility is the best way to improve our health care system in the long run. You, as an HSA owner, and as a consumer, are the engine that propels these improvements. Maximize your HSA contribution for 2010, as you deserve the tax break you're getting.
P.S. - As this message is being delivered to you, millions of Americans are heading for the polls - I'm sure you are one of them and I'd like to thank you for informing yourself and making your voice heard in our political system.
By the way, for even more clarity on your financial future join us Thursday, November 18 at 9:00pm Eastern (6:00pm Pacific), as we present "Six Tax Planning Strategies Most People Should Still Consider for 2010" with nationally recognized financial advisor Sean Rogers. Details at www.HSAforAmerica.com/financialplan.