Setting Up a Health Savings Account

Being prepared for the worst case scenario is often a good way to ensure that you are not caught off guard. This is especially important when you are dealing with your health. No one goes through life planning on a big event occurring and those huge medical bills, but they do happen and those bills start coming in, it can get a little bit scary. Luckily, with a little bit of planning and being ready for the bad, you could set yourself up to be covered no matter what.

A Health Savings Account, or an HSA, can be a great way to help you pay off some of your medical bills if they do occur later on in life. While you will need a high deductible insurance plan to go along with it, if you have some bill left after the insurance takes over and you pay the deductible, the HSA can come in and make the bills smaller. Plus you can save some money on your tax return at the end of the year if you set this up right. If you are interested in using this kind of savings plan, make sure to contact your tax professional right away.

What is a Health  Savings Account?

This is basically an account that helps you out with some of your medical bills once you have used up your insurance plan. It can take some of the stress from your back and allows you to deal with other things rather than suffering under all those debts. You can put the money in and let it grow tax free until you need it, and as long as the funds are used for medical purposes and you aren’t going against the rules that are set out, you will be able to avoid the taxes as well later on.

To set up one of these plans, you will first need to have a health insurance policy in place. You can pick one out from your employer or go to the Healthcare Marketplace to find the one that works the best for you and for your family. Once you have this health insurance plan in place, you can work with your tax advisor to set up the health savings plan.

You are the one in control of this plan so choosing how much you would like to save back each month or if you would like to make larger contributions or not is al up to you. You just need to be smart about what you are doing to ensure that there is enough money in there when you need it the most.

You do not need to use the money that you put into the account each year. If you don’t have any major medical bills or you are able to use mostly insurance for the medical bills, the money inside your savings account will continue to be there and accrue interest over the months. Even if it takes five, ten, or more years before you need to use it, continue to make your contributions and watch this money continue to grow more and more. Once you do need it for your medical bills, there will be a large sum waiting for you. Your tax professional will be able to crunch the numbers with you and help you determine if this is the right plan for your needs.

Benefits of a Health  Savings Account

The main benefit of this account is that you can contribute to it and get this money written off from your taxes. as long as you are able to keep all the right paperwork and ensure that you are making these payments, the money can be written off, with the help of your tax professional, at the end of the year. In addition, as long as you use the money inside of the account to pay for qualified medical expenses, you will not have to pay taxes on anything that you withdraw from the account as well. This makes it a very affordable way to save for those pesky medical bills, even if you do not end up using the money for a long time to come.

Another benefit is that you get to save up for your health. It is really hard to rely on your insurance and your regular savings to help get you out of trouble when a large surgery or other medical bill starts to come along. But when you use this kind of medical savings plan, those huge medical bills do not need to be as scary any more. You can use the money you have saved up over the years and pay most, if not all, of them off. The earlier you get started with one of these plans, the more you can save as you are less likely to need the money in your early 20s compared to your early 30s.

Figuring out how to save for your potential medical bills and to set up a Health Savings Account is never easy. You want to make sure that you are getting the most out of your money, but you also have to worry about paying off those bills. Contact our offices today to speak with a tax professional who will help you determine the best steps to take in order to set up this great medical savings plan.