30 Second Insurance Tips©

Tip 60- HSAs Double Your Tax Savings

It’s that time of year. No, I’m not thinking of green beer! It’s tax season.

A “qualified” high deductible health plan costs about 40% less than a traditional plan; e.g., one that has co‐pays for office visits and prescriptions. The idea is, you bank the premium savings in a Health Savings Account.

Every dollar you contribute to an HSA is deductible from taxable income.

For 2012, the maximum amount you can contribute to an HSA is $3,100; up to $6,250 if you have “family” coverage. For those ages 55 to 64, there’s even a “catch‐up” provision allowing an additional $1000 of contributions.

It gets better.

Withdrawals from an HSA for medical expenses ‐ as identified in IRS Publication 502 ‐ are not taxable.

It’s sort of like having your corned beef. And eating it too!