Health Savings Account Rules
It is important to know the health savings account rules before you decide to set on up. A health savings account is a savings account that can be used to help pay for medical expenses, that also that the benefit of having tax advantages. They are often used along with a health insurance plan that has high deductibles.
- Contribution limits. The contributions allowed in to a health savings account are limited by the IRS. The amount you can contribute for 2011 is $3,050 for an individual, $6,150 for a family each year. If you are age 55 or older you can also contribut an additional $1,000 per year. If you don't use all the money in a health savings account, the remainder is rolled over to the next year.
- Eligibility. In order to start a health savings account, you need to have a High Deductible Health Plan. This means that your deductible must be at least $1,200 if you are an individual or $2,400 for a family.
- Investment options. A health savings account is set up with investment options that can be compared to an IRA account. It is important to have a trusted account executive to manage the account and keep track of your balance and investments.
- Qualified expenses. Most expenses related to health and medical issues can be paid for with your health savings account. This also includes some expenses that are not covered by your insurance. A health savings account can not be used to pay for general well being expenses such as vitamins or vacations.
- Withdrawing funds. There is no need to get approval in advance when you need to withdraw funds from a health savings account. The money used is not subject to taxes as long as it is used to pay for a qualified expense.