Setting Up Health Savings Accounts (HSAs)
The high cost of health insurance is considered by many small-business owners to be their number-1 concern. Now there’s a way to cut costs by 40% or more by combining a high-deductible (lower-cost) health policy with a special savings account called a Health Savings Account (HSA). With the liberalization of certain HSA rules, combined with an ever-growing range of investment options, these accounts should gain in popularity. A survey by America’s Health Insurance Plans shows that 13.5 million people were covered by HSAs.
The Congressional experiment of combining high-deductible health insurance with savings accounts continues in the form of Archer Medical Savings Accounts (MSAs). (In 2005, the last year for which statistics are available, only about 18,000 individuals claimed deductions for MSA contributions.) These accounts are available only to self-employed individuals and small-business owners who had MSAs set up by December 31, 2007. There are many restrictions on eligibility. If eligible, you can use an MSA instead of an HSA. You can roll over amounts to an HSA. MSAs are discussed later in this chapter.
HSAs are open to anyone who, on the first day of the month, is covered by a high-deductible health insurance plan, is not covered by another type of health insurance plan (other than workers’ compensation, long-term care, disability, and vision and eye care), and who is not eligible for Medicare. This means ...