A health savings account, or HSA, is a special medical savings account offered by some employers to help lower the cost of healthcare. You can only open an HSA if you have a high deductible health plan (HDHP). The best part is that your contributions are tax-deductible when deposited into an HSA. To be eligible for this type of insurance, you must be enrolled in an HDHP and not be eligible for any other kind of coverage, including traditional insurance (e.g., Blue Cross), Medicaid, or Medicare.
Why Does Florida Have A Health Savings Account?
Florida’s legislature passed the Lawton Chiles Act, otherwise known as Chapter 636, in 1996. This act allows individuals who purchase their own health insurance to have a tax-deductible. Florida health savings account.
When Is The Best Time To Open A Health Savings Account?
Your employer may or may not offer the option of having an HSA in conjunction with one of their health plans. If they do, then it’s recommended that you take advantage of this option. It will allow you to contribute funds into an individual account and factor those contributions into your annual income taxes as long as you use them for qualifying healthcare expenses (e.g., co-payments, deductibles). In addition, your contributions are deductible when made and if used for medical expenses throughout the following year. You’ll avoid taxation altogether since any withdrawals from your account are excluded from your taxable income, even if you don’t use contributions to pay for medical expenses.
HSA eligibility requirements are a set of guidelines that both you and your health insurer must follow. You must purchase a high-deductible health plan (HDHP) with an annual deductible at least equal to the IRS’s minimum level. Your taxes will be reduced by your contributions to the account as long as you use them later on for qualifying healthcare expenses like co-pays or deductibles under your HDHP. If you withdraw money from your HSA that is not used toward healthcare expenses, it is taxed as ordinary income.