MD News

Serving the Bay Area Medical Community

HSAs for Small Business Owners

Posted by Alex Gault on February 20, 2006

Bay Area small businesses are constantly challenged to provide affordable healthcare insurance to employees (as are employees often for themselves). Some are considering Health Savings Accounts (HSAs). Here’s a useful outline of HSA benefits:

1. You can cover your insurance deductible and other medical expenses with funds from the HSA.

2. If funds remain in the account at the end of a year, the balance rolls forward to the following years.

3. At 65, you can use the money for any purpose with no penalties though the withdrawals will be subject to income tax.

4. Contribution limit in 2006 is $2,700 for an individual and $5,450 for a family.

5. You pay for medical expenses either with money from the account or your own pocket.

6. After the deductible is met, your health plan kicks in. Your share of the expenses depends on the plan you have. Some have 100% coverage; some have 80/20 coverage. Again, you choose whether to pay your share from your HSA or from your pocket.

7. You can use your HSA to pay for medical expenses that are not covered by your medical insurance plane. Some of these expenses won’t count toward meeting your deductible, but the tax advantages still apply.

8. There is a catch up provision for people age 55 and older. In 2006, it is $700.

9. There is a proration requirement. If you start the HSA in April, you only get
to put in 8 months worth or 2/3rds the total amount of the HSA deposit and the catch up contribution.

For more information, download this file (pdf) from the Department of Treasury.

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One Response to “HSAs for Small Business Owners”

  1. Antibush said

    Bush and the Republicans were not protecting us on 9-11, and we aren’t a lot safer now. We may be more afraid due to george bush, but are we safer? Being fearful does not necessarily make one safer. Fear can cause people to hide and cower. What do you think? What is he doing to us, and what is he doing to the world?
    Our country is in debt until forever, we don’t have jobs, and we live in fear. We have invaded a country and been responsible for thousands of deaths.
    We have lost friends and influenced no one. No wonder most of the world thinks we suck. Thanks to what george bush has done to our country during the past three years, we do!

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