Many tax payers choose to contribute each year to their health savings accounts. This allows them to have money for those expensive medical bills as they get older. But once you turn 65, Medicare comes into play and you will need to choose which one to contribute to. It is possible to continue contributing to HSAs after age 65, but you need to determine if it is cost effective or if you would be better choosing to stick with the Medicare option. If you are debating which is better, Medicare or your Health Savings Account, contact the professionals at Johnson, Johnson, and Associates to have the help you need to make the right choice.
What are HSA’s?
HSAs are health savings accounts. They combine the benefits of a tax favored account for savings with health insurance that has a higher deductible. You can use the money that is in the HSA to help pay for your deductible once you get enough in the account. While the deductibles may be higher than other insurances, you will save some money on taxes for that year. Once you meet your deductible, the insurance will start to pay for your medical bills. If you don’t use all the money in the account, it will start to earn interest for you to keep.
There are many benefits to this plan. You can deduct 100 percent of what you put into the plan, the withdrawals for your medical expenses will not be taxed, and you can keep the extra money if you don’t end up using it all. This makes it a great health insurance plan to help you afford your medical bills. If you are under 65 and would like to set up one of these plans, contact the professionals at Johnson, Johnson, and Associates to get the help that you need.
Medicare options
The problem with HSAs after age 65 is that your Medicare options start to kick in. These two will conflict with each other and you will find that it is difficult to get both of them to work. When you turn 65, you will have to choose between the HSA benefits and your Medicare benefits.
There are two types of Medicare that start to kick in when you turn 65. The first one is Medicare Part A; this one is going to help cover hospital treatments that you may need. The second one is Medicare Part B; this one will help to cover any outpatient care that you need. Part A is free so many people will sign up for this one, even if they continue working, but Part B does have a premium so people like to avoid this as much as possible if they are working past the age of 65.
Which Choice is right for you?
First, there are a few times when you are not going to be able to delay your Medicare benefits. If you are not working and you delay the Medicare benefits, there is often a penalty associated; those who continue working after the age of 65 can sometimes get out of this penalty depending on their benefits at work. The professionals at Johnson, Johnson, and Associates can look at your particular situation if you are working and help you determine whether you qualify for not joining Medicare.
Also, if you have already started taking out your Social Security Benefits by the time you are 65, you will be enrolled in Medicare Part A and won’t have the option of turning this down, regardless of whether you are still working or not.
Regardless of whether you are able to choose HSA over Medicare at any point in your life, you have to determine if it’s the right option for you. Sit down with the professionals at Johnson, Johnson, and Associates to look over the HSA you are qualified for as well as your Medicare benefits long before you turn 65. Our professionals can look at the size of your insurance and what all it covers, who much your deductible is, how much your employer contributes to the plan, your tax deduction with this account, and how much you plan to pay out of pocket for your medical costs.
Once those numbers are calculated, our professionals will take a look at the benefits of having Medicare for Parts A and B. In some cases, it may be best to keep the HSA for a few more years, especially if you are planning on working at the time and we can help you to avoid the penalties for not taking the Medicare right away. In other cases, you may be better off taking the Medicare when you turn 65 and keeping the money from your health savings account for your own personal use.
Figuring out which medical plan is the right one for you can be a challenge. You want to make sure that you are paying as little out of pocket while getting the most coverage when it comes to your medical bills. Finding the right balance is not easy and you will need to crunch a few numbers. Our professionals at Johnson, Johnson, and Associates will be able to help you get these numbers right so you can choose the perfect plan for your health needs.
Filing your taxes can seem complicated. Let Fred Johnson from Johnson, Johnson, and Associates, Inc. in Yeadon, PA help with your tax return this year. Whether your tax returns are easy or complicated, we have the professionals to get them done right.
