logo

What is An HSA?

June 1, 2023

Why are HSAs only available with a High Deductible Health Plan?

A health savings account (HSA) is a tax-advantaged savings account and are only available to people covered by an HDHP. The insured individual, or their employer, make regular contributions to the account. These funds are not subject to federal income taxes at the time of the deposit or withdrawal if the funds are used for qualified medical expenses that HDHPs don’t cover, including the deductible expenses.

A piggy bank with a stethoscope and a notebook with the word hsa written on it.

NOTE: HSA contributions do not have to be spent or withdrawn during the tax year they were deposited. Any unused contributions can be rolled over—indefinitely.

For wealthy families who can afford to self-insure, an HDHP allows access to HSA tax-advantaged savings that they can use in retirement when the early withdrawal penalty for nonqualified expenses no longer applies.


However, if you are under the age of 65, any withdrawals for nonqualified expenses are subject to income tax and a 20% early withdrawal penalty.

Advantages and Disadvantages of a High-Deductible Health Plan (HDHP)

Advantages

Insured individuals with an HDHP end up paying lower monthly premiums. If you know that you are only going to need preventive care for the calendar year, then an HDHP would save you money.

 

Covered individuals are allowed to use a tax-advantaged HSA with an HDHP, so the money that you deposit into your HSA is tax-free and will help cut the cost of your high deductible.



Disadvantages

Higher deductibles mean that you have to pay more out of your own pocket for your medical and health care before the plan actually starts to pay for you. This can be a significant issue, if you have unexpected health issues.


A poster showing the pros and cons of a health insurance plan

Who Offers High-Deductible Health Plans?

You can get coverage under an HDHP through your employer. These plans are also available through government health care exchanges.


 To read the full article on Investopedia, Click Here: https://www.investopedia.com/terms/h/hdhp.asp

To learn more about the government health care HDHPs, Click here: https://www.irs.gov/publications/p969


A person is sitting at a table with a plate of food on it.

2023 Business Meals & Entertainment Expense - IRS Deduction

November 8, 2023
The IRS Updates the 2023 Meals & Expense Deduction
The logo for irs digital authorization for taxpayers

IRS Improves Services to Taxpayers with Digital Authorizations

October 11, 2023
The Internal Revenue Service has launched a new feature that will give taxpayers digital control over who can represent them or view their tax records. The new feature is one of many recent enhancements to the Online Account for individuals. It will allow individual taxpayers to authorize their tax practitioner to represent them before the IRS with a Power of Attorney (POA) and to view their tax accounts with a Tax Information Authorizations (TIA).
A poster that says `` got a letter or notice from the irs ? ''

Got a Letter or Notice from the IRS?

October 11, 2023
When the IRS needs to ask a question about a taxpayer’s tax return, notify them about a change to their account, or request a payment, the agency often mails a letter or notice to the taxpayer. If you get ANY type of letter from the IRS in the mail, we ask you to upload a photocopy of the notice to your client portal – even if you are able to address the issue on your own
Share by: