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Florida HSA Accounts
are by far the best value in health
insurance today. Health Savings
Accounts (HSAs) were approved by Congress in
2003—part of the largest expansion of
government intervention in medicine in 40
years—and became law in January 2004.
Since then the
idea of Medical Savings Accounts have spread like wildfire in the
public and private sector.
In a nutshell, the government is paying
you, by using tax deductions, to help you
pay for your health insurance, you do not
even have to itemize to get the savings.
It's like getting a significantly lower
deductible then you would ordinarily get.
Here's why, the government is allowing you
to write off the money you deposit into your
Savings Account. This money pays your Claims
until your deductible is met then all your
medical insurance expenses are paid. Lets
take a look at how these plans work.
The
HSA plan has essentially two parts.
First
there is a high-deductible major medical
plan. This is a complete health insurance
plan that will provide millions of dollars
of coverage for you and your family. Once
you reach your deductible, all eligible
expenses are covered 100%. The second part
is the Health Savings Account. This is an
interest-bearing account and the money rolls
over from year to year. You can use the
savings account funds for almost any type of
medical expense without worrying about
networks. Money contributed to a Florida HSA
is exempt from both Federal and State taxes,
like an IRA, and accumulates interest on a
tax deferred basis, like an IRA.
Here's an example of
how one works (using a
family of four with the parent ages of 45
and 40 and two kids):
Deductible: $ 5,650
Monthly Cost of Insurance $325.00
They
put into a Health Savings Account $ 429.16
Total Monthly Cost $ 754.16
Now here's the good part!
We will use a 28% tax bracket for this
illustration.
Tax Deduction for
Insurance (Insurance Premium x 100% x 28%) $
91.00
Tax Deduction for Savings Deposit (Savings
Deposit x 28%) $120.16
Total Tax Savings $ 211.16
Cost After Tax Savings $ 543.00
But
don't forget the $429.16 is your money and
its accruing 5% compound interest just like
an IRA would. Score one for for the
Individual Health Insurance consumer!
Where do the contributions go?
Contributions are 100%
tax deductible in 2006. What you do not use
one year rolls over to the next year and
continues to grow interest just like a
traditional IRA, but its a Medical or Health
related IRA... These tax deductions are in
addition to any IRA's you currently have and
will not effect those plans in any way.
Except of course, to lower your tax bill.
What if
I have a medical bill?
Large or small, all
medical expenses are covered by your low
cost Florida health insurance policy.
How do
I save money on my medical bills?
A traditional Florida
health insurance plan with co-pays, is
typically 30 to 70% higher in cost, more
restrictive to use than an Health Savings
Account and still leave you with out of
pocket expenses most people don't expect to
pay. An Health Savings Account plan
effectively reduces your deductible by your
applicable tax bracket. So if you're in a
28% tax bracket, its like receiving a 28%
discount on your medical insurance
deductible (e.g. An Health Savings Account
with a $5,250 family deductible is
effectively reduced to $3,780 when you use
your tax free money to pay your deductible.
Its not great but that's not bad!
How
does the Health Savings Account Work?
Take the premiums you
currently spend on a high cost traditional
individual or group plan and split it into 2
parts. One part will go to pay for the lower
cost higher deductible health insurance plan
and the other part. "The amount saved" would
go into the medical IRA. There is complete
flexibility on where the saved part of the
premium goes. Typically you are guaranteed a
minimum of an interest bearing account
earning 4%.
The savings placed in
the Health Savings Account can be used for
the small medical expenses until the
deductible is met. You will receive a check
book and interest will be compounded on your
balance in the account. Typically the
savings are F.D.I.C. insured. Should the
need arise for a larger medical expense then
the higher deductible health plan would kick
in and limit the out of pocket expenses to
the deductible each year.
What
applies to my health insurance deductible?
All covered medical
expenses apply to the deductible each year
including Doctors office visits,
Prescriptions, and any major medical claims.
Health Savings Account family plans have one
deductible for the entire family. So, all
covered medical expenses for the entire
family apply to one deductible.
How
many deductibles are there?
Typically there is only
one family deductible. No more deductibles
for each family member. There is only one
deductible for the entire family when 2 or
more people are covered on the same plan. We
typically suggest a 100% co-insurance level
( meaning you pay nothing more once your
deductible has been met....including Rx and
doctor visits! ) to limit the entire out of
pocket expenses to the chosen deductible.
What
else can the Health Savings Account be used
for?
Tax free dollars can
also be used to virtually pay for all other
medical expenses typically not covered under
traditional types of health plans like
dental, eyeglasses, contact lenses, Lasic
eye surgery and much more.
The many other benefits
to the Health Savings Account's are outlined
in detail when we meet for an appointment
either by phone or in person.
We understand Health
Savings Account's and we know how to set
them up for simplicity. We know how to
explain them to our clients.
Call today at
(407)
425-9347 with questions, or
click here to get
a quote now.
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