Oregon Health Savings Accounts Add Up
If you are online shopping for Oregon individual health insurance, then no doubt you’ve read about Oregon health savings accounts. Oregon health savings accounts sure do add up to big savings. Many people just don’t understand how they work. When a person has a health insurance plan with a high deductible, they can open a health savings account. This savings account comes along with really beneficial tax advantages. You get to write off 100 percent all money deposited into this account from your gross income at tax time. This will significantly improve the outcome of your tax season. Tax deferred interest is earned on this money as well, and rolls into the following year if it is not used. There is some confusion between this and Flexible spending accounts, which are lost if not used within that year.
Each year, the IRS determines what the maximum amount that can be placed into Oregon health savings accounts. In 2010, that amount was established at $3,050 for an individual and $6,150 for a family. If you spend money from your health savings account in order to pay for medical expenses, this money is also tax free. The IRS also establishes what is considered a qualified expense and this is usually used on items that are above and beyond those things covered by traditional Oregon individual health insurance. Some examples include glasses, over the counter medications, and dental work.
According to the IRS rules, a ten percent tax is placed on any and all non-qualified expenses if the money is withdrawn for a non-medical purpose. For example, if you withdraw money in order to take a big vacation then that money is going to be taxed the ten percent. Each year, with an Oregon health savings account, you receive a form called the 5498-SA, on which you report annually the contributions and withdrawals to the account for tax purposes. Again, any money placed into the account will be deducted from your total gross income at years’ end for tax purposes, and money spent on medical expenses is not taxed.
Oregon health savings accounts can help you save a lot of tax dollars each year by reducing tax liability. This is especially good for those people who do have a lot of out of pocket medical expenses each year, but can be beneficial to anyone who does have some out of pocket expenses. Since you don’t forfeit it like a Flexible spending account, there’s truly no risk! When shopping for Oregon individual health insurance, consider a health savings account to save your family a lot of money.
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