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Health Savings Account Basics

Since health insurance deductibles have risen to such high levels, it makes more sense than ever to consider the Health Savings Account (HSA) as part of your financial plan.  HSAs have some real advantages to other other tax favored healthcare savings plans.   Here are some HSA basics.

HSA contributions made by the owner are tax deductible.  Contributions are excluded from gross income. Distributions for qualified medical expenses are tax free. There are no time constraints on spending your HSA balance.   In addition, Health Savings Accounts are portable.

Generally, medical expenses that you can deduct on your tax return are qualified for HSA purposes. Long-term care insurance premiums are qualified expenses. Also, other health care coverage like COBRA and some Medicare expenses also quality.  Medicare supplement premiums are not a qualified expense.

Deductibles for high deductible plans must be at least $1,350 for individuals and $2,750 for family plans.  Preventative care benefits with a lower deductible or no deductible will not disqualify the plan as a high deductible plan. Contribution limits are $3,500 for individuals and $7,000 for families.  Also, if you are  over 55, you can contribute and additional $1,000. Individuals enrolled in Medicare can not contribute to an HSA.

Finally, one source of confusion is whether participants in a group health plan can have an HSA.  The answer is yes.  While employers are not required to offer HSAs, if your plan is a high deductible plan, you can contribute to an HSA.  Permission or authorization is not necessary to open an HSA.  Any qualified HSA trustee like a bank or insurance company can open an account on your behalf.

Considering all this, maybe its time to give the Health Savings Account a try?

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual, nor is intended to be a substitute for specific individualized tax advice.

About LPL Financial
LPL Financial (Nasdaq: LPLA) was founded on the principle that the firm should work for the advisor, and not the other way around. Today, LPL is a leader in the markets we serve,* supporting nearly 20,000 financial advisors, and approximately 800 institution based investment programs and 500 independent RIA firms nationwide. We are steadfast in our commitment to the advisor-centered model and the belief that Americans deserve access to personalized guidance from a financial advisor. At LPL, independence means that advisors have the freedom they deserve to choose the business model, services, and technology resources that allow them to run their perfect practice. And they have the freedom to manage their client relationships, because they know their clients best. Simply put, we take care of our advisors, so they can take care of their clients

*Top RIA custodian (Cerulli Associates, 2020 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S (Based on total revenues, Financial Planning magazine 1996-2021); No. 1 provider of third-party brokerage services to banks and credit unions (2020-2021 Kehrer Bielan Research & Consulting Annual TPM Report); Fortune 400 Company as of June 2021. LPL and its affiliated companies provide financial services only from the United States.

Jones & Company and LPL Financial are separate companies.

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