Texas Health Savings Account Plans
Texas HSA Plans
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Texas HSA Plans

Texas HSA Plans

Uncle Sam wants to help pay for your health insurance

By taking advantage of the tax savings offered by HSA (Health Savings Account) plans, you will see a dramatic reduction in your health insurance premiums. In some cases, premiums are completely canceled out by the tax savings.

You do not have to be self-employed or even itemize on your income taxes to take advantage of these plans. If you happen to be self-employed, the tax savings are even greater. You owe it to yourself to investigate these plans.

A Simple Explanation of Health Savings Accounts (HSAs)?

You can read the rest of this site for some more details, but here is a simple explanation of what these plans are all about.

There are two parts to HSA's; the health insurance part and the savings part.

The health insurance is a high deductible PPO plan. There are certain minimum and maximum out of pocket limits that are required by law. You pay a premium each month for the health insurance just like you do for any other plan. However, these plans are relatively inexpensive.

At the same time, you are permitted to put away a certain amount of money each year into a special savings account (the Health Savings Account). This is in addition to the premium you pay for the health insurance. The money you put into the account:

- It is your money. It does not belong to the insurance company.
- You don't lose it at the end of the year. It rolls over and continues to build.
- You receive interest on it.
- For every dollar you put into the savings account, you can take a dollar off of your gross income on your taxes. This is the tax savings part.
- As long as you use the money in the savings account for medical expenses, even expenses that are not covered by the plan, you will never pay tax on the money.

The idea is to give you all of these tax advantages and use the savings account to pay for the out-of-pocket expenses. It really works. You will save a bundle with these plans.

What are Health Savings Accounts (HSAs)?

A Texas Health Savings Account is a tax-exempt account with a financial institution in which you accumulate savings to pay for medical expenses. Contributions and income earned on funds in the accounts are 100% TAX FREE as long as you use the money for a qualified medical expense. The account allows you to enjoy tax reductions while having affordable premiums and decreasing your out-of-pocket expenses without risking your insurance protection.

The money in the account does not dissappear at the end of the year. It rolls over to the next year and does not effect how much you can contribute each year.

You cannot have a Health Savings Account without having a qualified health insurance plan. You can pretty much forget about using your current health insurance.

There are a number of places where you can set up a Health Savings Account. The money can be put into CD's, mutual funds, stocks, etc.

Health Savings Accounts Benefits

1. Contributions are taken off of your gross income (even if you don't itemize)
2. Interest or other earnings on the assets are tax free, money grows tax deferred
3. Money saved can be used for qualified medical expenses
4. HSA funds can also be used to pay COBRA or other medical insurance premiums during periods of unemployment or temporary layoff
5. You never have to take the money out of the HSA. Contributions remain in your HSA until you use them. At age 65, unused HSA money can be withdrawn (but you don't have to )for non-medical reasons without penalty (similar to an IRA, ordinary income tax will be charged on the money withdrawn for non-medical reasons)
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What may an HSA be used for?

Amounts that have accumulated in an HSA are intended to be withdrawn and used for actual medical expenses (for a list of the qualified expenses go to the IRS Publication 502) . If amounts contained in an HSA are not needed for medical purposes, they may, however, be withdrawn penalty-free for other uses after the individual reaches age 65, or if death or disability occur.

Otherwise, a 6 percent penalty applies. All non-medical distributions are included in ordinary income for tax purposes. In addition, HSA savings can - like IRA assets - be rolled over to another HSA once every 12 months, but may not be combined with IRA assets.

Actual HSA Plan Example

To bring all of this to life I will give you a simple illustration. This illustration will use a Plano zip code 75024 and a couple in the 30% tax bracket. I'll use a male of 40 and a female of 35. They are are self-employed and deduct their health insurance off of their income tax.

The monthly premium for a $5100 deductible 100% plan is $201 per month.
Remember that once this couple reaches $5100 in medical expenses, everything is covered 100%.

The are permitted to put in a maximum of $483 a month into their Heallth Savings Account (5800/12)

Tax deduction for health insurance is (.3 X $201) = $60.30

Tax deduction for their contribution is (.3 X $483) = $145.00

Total tax deduction is $205.30

At the end of the year our couple has virtually eliminated their premium and put $5800 in an interest bearing savings account. With the government giving them 30% on their money plus the insurance company paying another 2% - 4%, can you now see why these plans are so popular?

This is why I love HSA plans!

We represent a number of different carriers and can help you find an HSA plan that will keep most of your insurance premium in your own pocket. Give us a call for a free instant quote and answers to all of your questions.

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