HSA

An HSA is an innovative approach to health insurance that is made up of 2 components:

1. A qualified high deductible health insurance plan
2. An Individual Tax-exempt Trust (savings/investments)

The trust account is designed to pay for routine medical expenses/and or provide savings for the future. Money put into the account can be used either during the year or accumulated in the account. Allowable medical expenses are defined by the IRS, and are much broader than most insurance carriers (i.e. includes dental, vision). Individuals can deduct dollars contributed to the HSA account from their gross income, resulting in tax-free medical dollars. The account is similar to an IRA account, however it is for qualified medical expenses.

Some of the benefits of an HSA include:
* Lower health insurance premiums than with regular health plans
* Contributions may be made by an individual, an employer or both
* You own your HSA and choose how to invest the funds
* You are eligible to deduct contributions you make on your federal income tax return even if you do not itemize deductions (California does not permit the deduction).
* Interest and other earnings on an HSA maintained in accordance with federal law are not taxable on your federal return.
* Withdrawals for qualified medical expenses are federally tax-free
* Catastrophic protection is provided through the high deductible health plan
* HSA plans continue to grow if the money is saved and not used for health-related expenses since funds may be rolled over to subsequent years
* Freedom of choice to see any physician you choose