The implementation of a
2008 IRS HSA requirements for an HSA:
Annual HDHP Deductibles
Minimum’s: Single $1,100 and Family $2,200.
Maximum OOP (Out-of-Pocket) Single $5,600 and Family $11,200.
Maximum HSA Yearly Contributions:
Single $2,900 and Family $5,800
NOTE: Not all plans are HSA qualified. This is typically a High Deductible
That’s not even the best part. Everyone needs
Here is an example: Family of 4, 40 year old male non-smoker, 38 year old female non-smoker and 2 kids, paying $3,600 per year. For a family the max you can contribute to your HSA account is $5,800 for the year. If you were in a 30% tax bracket (most who read this will be in a higher one) this is giving you a tax benefit of $1,740.00 for the year for your contributions. If you are self-employed and deducting the premiums as well this will give you an additional $1,080.00 per year. This brings your total yearly savings to $2,820. Your net cost on paying $3,600 on your premium is $780.00 per year for the entire family. If you break it down it would be $65.00 per month, or $2.17 per day. That’s the cost of a can of pop and chips per day. Wouldn’t you say that’s affordable? There is no excuse why your family shouldn’t be without insurance.
Now take a single male, Johnny, striking it on his own on his Million dollar idea. Let’s say he is 31 years old non-smoker. His yearly premium is $1,020. The max an individual can contribute to your account is $2,900. This will give him a deduction of $870.00 on his contribution and $306.00 from his
But what about my co-pay?
Believe it or not, I just saved you approx. $2,800 for the year on your family’s
MY BEST ADVICE: Fully fund your account every year. DO NOT wait until April 15th, tax day, to contribute for the previous year’s tax return (the government allows you contribute up to tax day for the previous year). The reason for this is you are missing out on your TAX-FREE growth of your account due to it being interest bearing.
Now, let’s not get a head of ourselves here with the savings we have here. You may have saved over all monthly premium compared to your previous plan by switching to an HSA. I wouldn’t recommend going out and buy a new car, new fishing boat or spend it on a luxury vacation. I would recommend investing it in your family.
First, take a portion of the savings and buy yourself and your spouse what’s called a Critical Illness insurance policy. This a policy that writes you a check for the amount you choose based on what you can afford, not tied to your income when diagnosed with a critical illness such as cancer, stroke or heart attack. Wouldn’t it be better to pay off your house at a time like this instead of losing your house? Granted, even on the HSA plan you cannot deduct Critical Illness Insurance or Life Insurance premiums for tax purposes or use your Account to pay for the premiums. More important than tax savings you are protecting your income and your assets. Your income and assets are what supports your family’s lifestyle. The remaining premium savings should go towards other long term investments such as Long Term Care, college funding, IRA or other Retirement Portfolio and whatever else you need to help your family to live more comfortable and secure.
Source by Butch Zemar