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Question:


How can I set up a Health Savings Account to fund my medical expenses in retirement?
-MistiG


Answer:


Whether you incur medical expenses in retirement or earlier, the procedure for establishing a Health Savings Account is the same: Read the fine print in the tax code to make sure you are eligible for an HSA, then see what’s on offer from your employer or shop around in the marketplace.
 
Employer contributions to an HSA are tax free, and contributions that you or someone else makes on your behalf, such as a family member, are deductible, even for taxpayers who don’t itemize. Money accumulates in the account tax free, too, and can be used to cover some health care costs but not others. There are also contribution limits and, most important, the accounts must be established in conjunction with a high-deductible health plan – insurance that only kicks in after annual medical expenses exceed $1,200 for an individual policyholder or $2,400 for a family.
 
When it comes to choosing an HSA, an obvious first place to look is at work. The prospect of employer contributions increases the likelihood that you will come out ahead by going with a company-sponsored HSA rather than one you find on your own. If your employer doesn’t offer one or if you’d just like to comparison-shop, many of the large health insurance providers have HSAs and, for a second helping of alphabet soup, HDHPs. and http://www.actuary.org/pdf/health/hsa_oct07.pdf – and from IRS Publication 969.
 
There are also websites that compare rates and features of third-party accounts and health plans. If you prefer the human touch, you can consult a financial planner who specializes in health matters. Meanwhile, independent information on HSAs is available on these websites – http://www.treas.gov/offices/public-affairs/hsa/
-Conrad de Aenlle



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