Managing a Health Savings Account
February 6, 2008
Like all issues dealing with the government and tax free saving plans, the whole idea of a Health Savings Plan can be totally confusing. Do you qualify? What are to contribution limits? Can the money be invested? What happens if I draw it out for something other than health care? Do you need a health savings account provider?
Unfortunately, as I was researching the topic, I did not find an independent provider that has no particular affiliation and your best interests at heart. Most providers are bankers that set up HSAs like any other long-term savings plan, similar to an IRA. Of course, different financial institutions will want to be most helpful, because they want you to put the money into their business.
Ultimately however, it will be solely up to you to monitor the account, making sure you only save the allowable amount, and how to replenish the account, if you have to use any of the money for a medical expense. You cannot roll the money over into another type of savings account. The money is only to be used for health care.
Even if your boss also contributes to your HSA, you are the one to make sure the account is in good standing and will not come under the scrutiny of the Federal Government. So, you need to do your homework and make sure to abide by the rules and regulations. However, I think there is a good place for you to get advice.
If you go to an accountant to do your taxes, ask about a Health Savings Plan. Even if you have read the 40 page manual, verify that you correctly understand all the legalities. If you do your own taxes, you can go to IRS.Gov and get lots of information from their website. Several articles are already posted regarding the subject. Should you still have questions, you can contact the IRS directly and ask.
I know. It does seem a little freaky to be contacting the entity that loves to part you from your money. But, who better to know the rules regarding a tax free savings plan. Plus, they can redirect you to other personnel qualified to make sure your HSA works for you, and you have the information necessary to provide for yourself.
Does anyone else know of good resources to help make sense of and manage a health savings account?
Tina
From what little I understand, I think hsa is an excellent start in addressing the health care issue.
I would definitely check with your employer. HSA’s save them money, so a lot of them are really good about giving you information.
My one pet peeve is that my state (Wisconsin) is one of only 5 that don’t allow HSA’s to be tax-free on the state level. Plus, the extra tax form I have to fill out is really confusing. Grrrrr!
🙂