Acronyms have been around for a long time. Pontius Pilate used the acronym INRI on Jesus’ cross. It stood for Iesvs Nazarenvs Rex Ivdaeorvm, which meant Jesus of Nazareth, the King of the Jews. We’ve not stopped using acronyms throughout history, and the world of health insurance is no exception.


One lesser known acronym that needs to be better promoted is the HSA. A Health Savings Account or HSA or “Healthcare IRA” is a savings account used with high-deductible health insurance that allows you to save money tax-free to pay for medical expenses. An HSA lets your pay medical expenses with tax-free dollars, deduct your contributions to that account, and create tax-deferred retirement income. If a three-pronged benefit weren’t enough, the most unique feature of an HSA is that you don’t need to have earned income to contribute to it. Remember that for a Traditional IRA, a Roth IRA, and a company 401(k) you must have earned income to contribute – no job, no contribution! Not so for an HSA.


Another recent event – the Affordable Care Act – has made it easier for more people to qualify for HSAs. In the past, fewer insured individuals had high deductible health plans (HDHPs). In 2015, more do. An individual HDHP in 2015 has a minimum annual deductible of $1,300 and a maximum out-of-pocket expense limit of $6,450. Family limits include a minimum annual deductible of $2,600 and a maximum out-of-pocket expense limit of $12,900.


Benefits of the HSA include:

  • Earnings grow either income tax-free or income tax-deferred.
  • Withdrawal of contributions and earnings are income tax-free if used to pay for qualified medical expenses (costs to diagnose, treat or prevent disease; health insurance premiums; long term care insurance premiums)
  • Tax-deferred earnings become taxable only when withdrawn for non-qualified expenses. A 20% penalty may apply to premature nonqualified distributions.
  • Contributions are deductible on a taxpayer’s income tax return, subject to limits.
  • If HSA funds are not required for medical expenses, distributions may be taken to supplement a client’s retirement income.


With an HSA, you can LOL at the IRS! C if u qualify 2day.


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