If you have to pay a lot of out of pocket medical expenses, chances are you have what is called a High Deductible Medical Insurance Plan.
These are becoming popular with employers because they are far cheaper than comprehensive insurance policies. These are especially attractive for small businesses who simply can't afford comprehensive insurance for employees.
The burden of the cost of the insurance, and the additional medical costs shifts to the employees.
One way for the individual to help with the additional cost of health insurance, and medical expenses is to get a health savings account or HSA
A health savings account is basically a checking account that is used for health related expenses.
Money that is deposited into your health savings account is tax deductible.
Money that is spent from your account is intended to be used for medical related purposes. If you spend money from your HSA for non-medical related expenses, you are penalized on those expenditures.
You will receive annual statements for your tax returns that show the amounts that you deposited and spent from your account.
Banks have different requirements for minimum balances etc...
As the name implies, "Savings Account" this is a savings account. This is your money treated like a savings or checking account.
There are some rules for HSA accounts.
HSA's are only for those who have "High Deductible" health insurance. For 2015 a high deductible insurance plan is defined as having a deductible $1,300 or $2,600 depending on single coverage or family coverage.
For IRS purposes, you have to keep your medical receipts for expenditures from your HSA accounts as supporting documentation.
There are limits as to how much you can deposit into your HSA account. This depends on who is covered, you or your family, and the amounts are $3,350 or $6,650 for 2015
Nuts and Bolts
Ask about getting a debit card for your HSA account. This will make it easier for you to pay for medical expenses such as prescriptions at pharmacies.
Ask your bank about the minimum balance requirements and keep the minimum in the account. When you get a medical bill, write the check from your HSA, then write a check for the same amount from your checking account and put it into your HSA account. The deposit into your HSA is tax deductible
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