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HSA for America Releases the Top Five Tips for Using Health Insurance to Save on Income Taxes

Few people have even a basic understanding of health insurance practices, and they are not taking advantage of the tax deductions offered by Health Savings Accounts. HSA for America explains how to use this form of insurance to reduce income taxes.

 
PRLog - Nov. 21, 2011 - FORT COLLINS, Colo. -- Recent surveys prove that only about half of the insured understand basic health insurance principles. The small number of people who realize that health insurance savings go beyond low premiums and out-of-pocket costs is shocking. Since 2004, one form of health insurance has been providing substantial tax advantages that could be keeping more money in family budgets. To help people benefit from Health Savings Account plans, HSA for America has developed The 3 Keys to Health Savings with an HSA webinar (register at http://health--savings--accounts.com/webinar.php) and has released five top strategies for using health insurance to reduce income taxes.

In September and October, a national survey from Kelton Research revealed that just 41 percent of participants could explain the term “premium.” Only 25 percent understood the concept of co-insurance. The idea that a health insurance policy could also reduce taxable income is still relatively unknown, yet the average person can lower income tax payments without even itemizing deductions. Only one type of health insurance provides tax deductions.
                                                               
Tip #1 – To permit the policyholder to claim tax deductions, a health insurance plan must meet certain requirements that are adjusted each year, and the insurance company providing the plan must agree to report qualifying policyholders to the IRS.

To identify qualified policies, look for "Qualifying High Deductible Health Plan" or a reference to "IRC Section 223" on the plan’s declaration page. If this documentation is not available, it is NOT a HSA-qualified plan.

To gain tax deductions for the 2011 tax year, a HSA-qualified health plan must be effective by December 1, 2011.

Tip #2 – Several leading providers of HSA plans do not accept applications up to the December 1 cut-off date. Kaiser only accepts applications until Thursday - Thanksgiving Day.  Assurant is taking applications until Sunday, November 27. Most other companies, with the exception of Aetna and UnitedHealthcare, will take applications until November 30. Neither Aetna nor UnitedHealthcare will accept applications at this point.

Once a HSA-qualified policy is effective, the actual HSA must be set up to facilitate tax deductions.

Tip #3 – Only HSA contributions can be used as tax deductions. For self-coverage plans, HSA owners may deposit up to $3,050 and claim the entire amount as a 2011 income tax deduction. Those with a family plan may deposit up to $6,150 to claim as a deduction. Individuals age 55 or older may contribute an additional $1,000. HSA contributions may be made up to April 17, 2012 to reduce 2011 taxable income.

The IRS permits individuals to open more than one HSA, which facilitates accumulating tax-free earnings.

Tip #4 – The original HSA can be cash-based so funds may be withdrawn easily to pay for medical costs not covered by insurance. Funds in a second HSA can be invested in stocks and bonds or mutual funds to allow contributions to grow with tax-free earnings.
Those who are married and self-employed can save more on taxes by establishing a Health Reimbursement Arrangement (HRA). This is allowed when a spouse works at least part time in the business.

Tip #5 – A HRA enables the business to reimburse all out-of-pocket medical expenses, including health insurance premiums, as a tax-free benefit. This was established in Section 105 of the IRS tax code in 1955 and provides a full business expense deduction on federal, state and FICA taxes. Complete information regarding such arrangements is available at http://www.health--savings--accounts.com/hra-self-employe....

HSA plans provide coverage similar to that of other high-deductible health plans, but only HSA plans allow policyholders to claim HSA contributions as “above the line” tax deductions. Contributions may be deposited until April 17, 2012, but the HSA-qualified health plan must be effective by this December 1 in order to take deductions for 2011. Educational resources are available online at http://www.health--savings--accounts.com/index.htm to help people start a HSA plan. Free registration for The 3 Keys to Health Savings with an HSA webinar is also available at http://health--savings--accounts.com/webinar.php.

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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 a comprehensive website at http://www.health--savings--accounts.com/, consumers can evaluate high-deductible health insurance plans that allow them to establish an HSA.

Guidelines for selecting an HSA administrator based on fees and investment options are readily available at http://www.health--savings--accounts.com/admins.htm. Topics to help consumers maximize their savings on premiums and taxes can be found at http://www.health--savings--accounts.com/how-to-guide.htm.

Consumers may access HSA for America’s instant quote engine and online applications or request individualized assistance. Confidential consultations regarding HSA Plans and Health Reimbursement Arrangements may be arranged by calling 1-866-749-2039 from 9 AM through 11 PM Eastern.

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Contact Email:
***@hsaforamerica.com Email Verified
Source:HSA for America
Phone:1 (977)-239-1810
Zip:80525
Location:Fort Collins - Colorado - United States
Industry:Finance, Health, Insurance
Tags:health insurance, health savings accounts, reduce income taxes, qualified HSA policies, Health Reimbursement Arrangements
Shortcut:prlog.org/11730261
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