Health Saving's Accounts have been called the medical IRA because they offer tax advantages on contributions, interest and qualified withdrawals. They work in conjunction with high deductible health insurance plans. The high deductible means lower monthly premiums for the consumer. The money saved in premiums might be put it in the HSA.

The amount contributed to the HSA is subject to the annual contribution limits. For 2008, the maximum annual contribution limit is $2,900 for single coverage and $5,800 for family coverage. If during the year you incur medical expenses you can pull the money from the HSA to help pay for qualified medical expenses tax-free. Funds not utilized in the HSA account accrue interest tax-deferred.

Benefits of HSAs:

• Premium savings and tax advantages.
• HSA contributions could be tax-deductible.
• Interest gained is tax-deferred.
• Withdrawals for qualified medical expenses are tax-free.
• Funds can be used to pay for qualified medical expenses that go toward annual deductible or expenses not covered by the plan.
• Subscribers might be able to contribute up to 100% of their annual plan deductible to their HSA.
• High deductible plan means lower monthly premiums and not paying for benefits not utilized.
• Funds in the HSA can be used to cover expenses if need be, if that money is not used it stays put and earns interest toward your retirement!

For more information on Health Savings Accounts, please click here for access to the Department of the Treasury's Website.

** Qualified medical expenses are defined by the legislation that created HSAs. If you would like to view the list of qualified medical expenses click here.

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