New Health Savings Account ( HSA ) for 2004
Details on the Health Savings Account which is all new for 2004
(PRWEB) April 16, 2004
The Treasury Department and the Internal Revenue Service today issued guidance regarding the new and innovative Health Savings Accounts (HSAs). HSAs were created by the Medicare bill signed by President Bush on December 8th and are designed to help individuals save for qualified medical and retiree health expenses on a tax-free basis.
"Starting January 1, 2004, new innovative Health Savings Accounts will change the way millions can save to meet their health care needs," said Treasury Secretary John Snow. "We want Americans to be able to take advantage of HSAs as soon as possible," stated Treasury Secretary John Snow. "An HSA is a good deal, and all Americans should consider it. HSAs will help consumers have more choice in meeting their health care needs, and we are acting today to clear the way."
Any individual who is covered by a high-deductible health plan may establish an HSA. Amounts contributed to an HSA belong to individuals and are completely portable. Every year the money not spent would stay in the account and gain interest tax-free, just like an IRA. Unused amounts remain available for later years (unlike amounts in Flexible Spending Arrangements that are forfeited if not used by the end of the year). Tax-advantaged contributions can be made in three ways: the individual and family members can make tax deductible contributions to the HSA even if the individual does not itemize deductions, the individualÂs employer can make contributions that are not taxed to either the employer or the employee, and employers with cafeteria plans can allow employees to contribute untaxed salary through a salary reduction plan. Funds distributed from the HSA are not taxed if they are used to pay qualifying medical expenses. To encourage saving for health expenses after retirement, HSA owners between age 55 and 65 are allowed to make additional catch-up contributions ($500 in 2004) to their HSAs.
HSAs are more flexible and are available to many more individuals than Archer MSAs
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