Rising healthcare costs highlight use of HSAs


December 22, 2011

 

Healthcare costs have consistently risen during the past several years, while the benefits offered through employer-sponsored plans have at the same time gone down. That trend of paying more for less may show the need for a greater utility of health savings accounts, or HSAs, in your personal finances, says the Cannon Financial Institute.

A recent study released by the Commonwealth Fund found that the premiums for employer-sponsored family health insurance ratcheted up 50 percent from 2003 to 2010. Employers also chose to bear fewer of those rising costs, as employee contributions jumped 63 percent during the same period.

"Whether you live in California, Montana, or West Virginia, health insurance is expensive," said Commonwealth Fund senior vice president Cathy Schoen, lead author of the report. "Workers are paying more for less financial protection."

Per-person deductibles have also nearly doubled, and the average amount of cost to employees for healthcare rose to more than $3,700 annually. If those trends were to continue, then costs would jump another 72 percent by 2020, making financial planning related to healthcare a necessity.

In an environment in which health insurance coverage is becoming more expensive, it may be advantageous for high net worth workers or the self-employed to alter their plans using health savings accounts to reduce their taxable income while still being protected in the event of a medical or health issue.

First, you can purchase a health insurance plan with a high deductible, which will help reduce overall premium costs. At the same time, however, you contribute earnings into an HSA, which can be used to pay for any qualified medical costs with minimal tax implications.

In order to be eligible to contribute to an HSA, Cannon says you must be covered under a high-deductible plan at the start of the month, not enrolled in Medicare or covered under another plan or claimed as a dependent. For a family plan, the source says the annual deductible should be at least $2,400 and out of pocket costs of $11,900 or less.

Once the HSA is set up, Cannon says you can contribute up to $6,150 annually for families, with those deductions able to be deducted from gross income. Members of your family can then take tax-free distributions from the account at any time for eligible expenses, such as co-payments, preventive care or other items not covered by insurance.

HSAs can also factor in estate planning. Upon death, anything remaining in your account would pass to a surviving spouse or be included in your estate.

Comments

Leave a Comment
* All fields required
Your Name:*
Subject:*
Your Comment:*
 
 
WSGsEamQeULReVvYZui
Hey, that's a clever way of tihnikng about it.
By Nook @ 2012-01-26 15:30:14  
QtuGKOGpsdbKGEutG
kvqlZJ czhpmmzinbbe
By hfqxvbwu @ 2012-01-27 11:27:24  
ijfVHyvDPuvR
xcapTe , [url=http://psifmgrcynuf.com/]psifmgrcynuf[/url], [link=http://hlioovedampy.com/]hlioovedampy[/link], http://xgmyyonmdafg.com/
By lqrmrvizob @ 2012-01-28 11:43:28  
IWKyskapxHQ
84aPvv afyttcnymloc
By lvffenv @ 2012-01-29 10:46:59  
jErIzZHEdyzffUmhNq
haTGnC , [url=http://crwcxtdogckx.com/]crwcxtdogckx[/url], [link=http://sfteyaxgnnmy.com/]sfteyaxgnnmy[/link], http://xqcjuikutlmp.com/
By ploakuut @ 2012-01-31 10:53:01