Are You Interested in TAX savings with your Texas Health Insurance Plan? Try an HSA!

What does a Texas Health Savings Account (HSA) have to do with Texas health insurance?

Think of the HSA (health savings account) as a combination between a high deductible insurance plan and an IRA (individual retirement account).

  • fund with pre-tax dollars
  • accrue interest tax-deferred
  • pay out medical bills tax-free

Texas Health Savings Accounts were created to go hand- in-hand with a qualified high-deductible health care plan so that individuals could pay less in monthly dues and put the savings (along with additional funds) in a tax-exempt HSA. An HSA allows you to use tax-free dollars to cover routine and minor medical expenses while you satisfy your deductible expenses that would otherwise come out of your after-tax income.

The HSA actually has two components:

1) High Deductible  Insurance Plan

2) Tax-favored Savings Account

First, let's look at the insurance part of it.

At its most basic level, a Texas major medical HSA includes a high deductible plan. You pay a monthly premium like any insurance plan to keep this protection in force. Note that the premium is usually much cheaper than other plans.

A deductible means that in a calendar year for covered expenses, you are responsible for 100% of the deductible amount before the company begins to pay.

Contact the experienced and licensed health insurance agents at My Texas Health Ins.com and we will answer all of your questions and help you find the right Texas health plan.  Call 1-281-394-0234 or fill out our easy online form for quick quote for the most popular HSA plans.

Now, let's look at the Tax-Favored Savings Account.

  • Individual contributions are tax-deductible, even if the taxpayer does not itemize. See IRS website for maximum amount of individual contributions.
  • Employer contributions are tax-free (if you have an HSA with your employer)
  • Deposits accrue interest tax free
  • Distributions are tax-free if used for "qualified" medical expenses

Qualified medical expenses include:

  • Amounts paid for the diagnosis, cure, mitigation, treatment of prevention of disease
  • Prescription drugs
  • Qualified long-term care services and long-term care insurance
  • COBRA continuation coverage required by Federal law
  • Health insurance for unemployed
  • Distributions made for any other purpose are subject to income tax and a 10% penalty. The 10% penalty may be waived in certain circumstances.
  • HSA funds may also be used to pay for retiree health insurance premiums other than Medigap. This includes Medicare premiums.

To see a  more complete look to a Texas Health Savings Account click on the National Association of Health Underwriters. 

http://www.nahu.org/consumer/HSAGuide.cfm

Now let's look at the exciting part for.... the HSA Savings Account.

By the book, Texas Health Savings Accounts are tax-favored accounts set up to pay for certain medical expenses and to allow for the build-up of savings to pay for future medical expenses. Accounts are set up with banks and certain other qualified financial institutions.

Money not used rolls over year to year. In fact, it earns interest tax-deferred. Past a certain limit, you can also choose to invest the excess depending on the bank or institution you choose to go with. You can continue to add up to 100% (up to certain limits) of a year's deductible...year after year. This money is separate from the premium you pay each month to keep your health insurance in place.

You own this money just like an IRA or savings account. This is the first part....funding and growing pre-tax.

The second part is where this plan actually surpasses an IRA....

For certain medical, dental, and long-term care expenses, payments made from your established and funded account is not taxed or penalized. At 65 you are able to withdraw this money penalty-free but subject to income tax. If you withdraw the money for non-eligible expenses before the age of 65, it will be subject to a 15% penalty and income tax.

So to sum it up....

High Deductible Insurance Plan +  HSA Savings Account

  • fund with pre-tax dollars
  • accrue interest tax-deferred
  • pay out medical bills tax-free

Contact  the experienced and licensed health insurance agents at My Texas Health Ins.com and we will answer all of your questions and help you find the right Texas health plan.  Call 1-281-394-0234 or fill out our easy online form for quick quote for the most popular HSA plans.

Our customers come from Dallas, Houston, San Antonio, El Paso, Austin and other great cities in the lone star state to find affordable Texas health insurance.