Health Savings Accounts - What You Should Know!

by: Keith Thompson

Maybe it took the State of The Union address from President Bush to bring the concept of Health Savings Accounts out into the open for all to see. Whatever the case, this is an idea and reality that is long overdue and a great solution to health insurance for many people. Health savings accounts, coupled with a companion low-cost high-deductible health care insurance plan, will take the bite out of monthly health care costs for many consumers, and provide a powerful savings component at the same time. Let's look at the details.

While Congress passed the legislation creating Health Savings Accounts in 2003, it has taken a while for the word to get out. In a nutshell, the deal is as follows: Health savings accounts are tax-free savings accounts, which are necessarily paired with a high-deductible insurance policy for catastrophic medical expenses. You are able to put as much as $5150 (family) or $2600 (individual) annually into these accounts, which are in turn used to cover normal and customary medical expenses, like doctor's visits, routine checkups, etc. Some of the neat things about these accounts, besides the tax-free part, are that you may carry over unspent money from year to year, and it does not matter where you work or for whom. They are completely portable. Also in most cases, it's very possible to realize large savings on your yearly insurance and medical expenditures. When you are in charge of how much you spend and where, the possibilities are eye-opening. Plus, you are not tied to any plan's particular doctor or medical group: you are free to choose whoever you want. Health savings accounts, when set up properly, can not only save you lots of meony, but also cannot be cancelled except by you.

Another enticing option regarding health savings account is the savings aspect. If you have a traditional IRA or 401(k) you get a deduction for all contribututions made yearly, but after age 65 all distributions are taxed at both the federal and state level, including capital gains. (Roth IRA's don't apply) With a Health savings account you get the same benefits as with IRA's and 401(k)'s, with the major difference being that monies withdrawn for qualified medical expenses are NEVER taxed! Also, with health savings accounts there is no age restriction on when you may withdraw funds like there are with the others. As far as using these funds for retirement purposes, health savings accounts are able to be withdrawn after age 65 for any purpose, without penalty, though in this case you would pay income taxes. This looks even better when you realize that account appreciation on health savings acounts is tax-free, and look even better for those who are self-employed, who may write off 100% of health care premiums. So in effect, you are buying a high- deductible insurance plan, paying the premiums from your business, and savings oodles of cash tax-free in your Health savings account. Of course, should you become sick, you'll not only have the ability to pay for your care, a major illness won't be the family-finance disaster it often is these days. More than 1 million Americans each year end up in medical bankruptcy becasue of inadequate coverage. Don't let this happen to you!

Health Savings Accounts are a train long overdue finally arriving at the station. Make sure to climb onboard!

About The Author

Keith Thompson is the webmaster at http://health.insurance-plans.info/health-savings-accounts.

For more information on health savings accounts visit the site today!

Does Early Mortgage Repayment Still Make Sense?

by: Stephen L. Nelson, CPA

Early mortgage repayment looks on paper at least like a wonderful deal. If you have a typical mortgage and you are near the beginning of the mortgage term and make an extra $25 a month in principal payments, you could potentially save $25,000 in interest over the life of the loan.

Note: The exact amount of early repayment savings depends on the loan, but, in general, the apparent savings are astounding.

In spite of the superficial profit that seems to come from early mortgage repayment, it?s often not a good decision. The tragedy here is if you would have used that $25 a month to boost your individual retirement account, or IRA contribution, you would end up with $50,000 in your IRA account. If you would have used the $25 a month to make extra contributions to your employer?s 401(k) plan, you might have easily ended up with $75,000 in a 401(k) account.

The...

Does Early Mortgage Repayment Still Make Sense?

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Benefiting Substantially From Your IRA Early

Benefiting Substantially From Your IRA Early

by: Ken Morris

If you own an Individual Retirement Account (IRA), the primary purpose is to accumulate assets to provide an income source during retirement.
In the accumulation phase, you may contribute to an IRA on a tax deductible basis (with some exceptions) with the earnings growing tax deferred.
Upon withdrawal, distributions will be included in income and taxed accordingly.
In addition, for those wishing to access their IRAs ?early,? distributions prior to age 59 ? will be subject to a 10% premature distribution penalty tax, unless an exception applies.

You may have thought that there is no way to withdraw funds from your IRA ?early?, before age 59 ?, and avoid the 10% penalty.
This is not true.
The IRS permits an individual, under the age to 59 ?, to make distributions from their IRA and avoid the 10% early withdrawal penalty if the distributions...

Benefiting Substantially From Your IRA Early

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How IRAs work

How IRAs work

by: John Mussi

Are you taking advantage of individual retirement account (IRA) opportunities? IRAs can be frustrating because of the different forms and reports, difficult or confusing IRA rules. Successful retirement planning usually means coordinating personal savings with benefits from an employer's retirement plan and social security. However, in the last 30 years, retirement planning has changed, putting more emphasis on personal saving through retirement plans at work and through IRAs.

IRA Owner Benefits

As additional incentives to save, IRAs provide current tax benefits, such as:

Tax-deductible contributions to eligible individuals of traditional IRAs (since 1975)

Nontaxable distributions from Roth IRAs (starting in 1998) are found to be a more attractive alternative by many individuals who are ineligible for traditional IRA deductions

Income tax deferral on IRA earnings enjoyed by both traditional...

How IRAs work

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The SIMPLE Way to Save For Retirement

by: Ken Morris

A relative newcomer to the retirement plan market, the SIMPLE IRA can be a cost-effective retirement planning alternative for small employers and their employees.

A SIMPLE IRA plan consists of a deferral program for eligible employees, along with mandatory contributions by employers. An eligible employer is defined as an employer who has no more than 100 employees that received at least $5,000 in compensation from the employer in the preceding calendar year. An employer maintaining a SIMPLE plan may not maintain any other qualified retirement plan in which employees currently receive benefits.

What makes the SIMPLE IRA so attractive to business owners is their ability to defer the maximum ($10,000 for 2006) without regard to employee participation.
There is no ADP test, which limits how much an employer may defer based on average deferrals of non-highly compensated...

The SIMPLE Way to Save For Retirement

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