Health Savings Accounts
Use pre-tax dollars to pay for health insurance premiums and co-pays
A Health Savings Account (HSA) or
Health Care Reimbursement Account (HCRA) is a type of Flexible
Spending Account (FSA). These accounts
can be used to pay for certain health care expenses with pre-tax
Eligible expenses must be paid for the diagnosis, cure, mitigation or treatment of a disease or injury. They must be focused on alleviating a physical or mental defect or illness. These expenses can include health insurance premiums, deductibles, co-pays, expenses associated with preexisting conditions, the difference in cost between a semi-private and a private hospital room, lab tests, the cost of non-prescription medicine used to treat injuries or illnesses, and other health-related expenses that aren't covered by insurance.
They are typically used in conjunction with a health insurance plan that has a high deductible (i.e., at least $1,000). The annual limit in 2005 is $2,000. You do not need to itemize in order to take advantage of this tax break.
Note: Any unused money left in your account at the end of the year will be forfeited.
Copyright © 2005-2009 by Mark Kantrowitz. All rights reserved.
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