| By :
Wiley Long
With high demand for tax-advantaged Health Savings Accounts, now there's a bank solely dedicated to health-related accounts. Blue Cross and Blue Shield Association members established the Blue Healthcare Bank, and it can provide a Health Savings Account (HSA) in all 50 states. A Blue Cross Blue Shield HSA, like any other HSA, offers a tax-free way to save money for health-related expenses. The Blue Cross and Blue Shield Association is a national group of 39 independent insurers, such as Blue Cross of Idaho that was among the first members to work with the Blue Healthcare Bank. The new bank can administer Health Savings Accounts for the 98 million people who have Blue Cross Blue Shield plans, but no one has to open a HSA just because they have Blue Cross Blue Shield insurance. Health Savings Accounts Work with Lower-cost Insurance To start a HSA, you must buy one of the high-deductible health insurance plans that can be combined with a HSA. As insurance premium increases spike by up to 39 percent, more people are switching to High-Deductible Health Insurance because these plans have lower monthly premiums than traditional plans. Since high-deductible health insurance plans cost less, you can contribute what you save on premiums to a HSA. If you're relatively healthy and don't have regular medical expenses, you'll save on premiums without having to spend much for medical-related fees. Health Savings Accounts Earn Tax-free Interest Like an IRA, a HSA earns tax-free interest, and all funds left in your account at the end of the year are carried over to the next year. When you retire, you can withdraw your HSA balance like an IRA. If you're under age 65, you can open a free HSA when you buy a qualified high-deductible health insurance plan, and you can keep your HSA even when you're covered by other policies. You can't have medical expenses paid by both insurance and a HSA, though. Compare HSA Plans to Find the Best Rates Not all high-deductible health insurance plans work with Health Savings Accounts. To open a HSA, you'll need a compatible high-deductible health insurance plan, and you'll need to compare plan benefits and rates. Check the policies' annual deductible, which is the amount you'll have to spend before coverage begins. After the deductible is met, what percentage will you have to pay for specific services, such as doctor office visits? That percentage is called coinsurance. Look for the annual out-of-pocket maximum, and the lifetime limit on coverage. Be sure you understand how the limits and maximums can interact. Working with in-network doctors and hospitals may be significantly less expensive so be sure you know which are considered in-network. Contributions to a HSA Are Tax-deductible In 2010, you can contribute up to $3,050 as an individual, and families can contribute up to $6,150 to a HSA. Contributions are not required, but your HSA contributions are tax-deductible, and withdrawals from a HSA to pay for qualified medical expenses are tax-free. Contributions can be made with pre-tax dollars through employers, or you can take a tax deduction when you pay for medical expenses with post-tax dollars. Health Savings Accounts Can Be Used for Diverse Health-related Costs In addition to common health-related fees, the qualified expenses you're allowed to use your HSA to pay for include expenses that may not be covered by health insurance. That includes dental fees and dentures, as well as the fees of psychiatrists, psychoanalysts, psychologists, and psychotherapists. Physical therapy fees are also qualified, including chiropractor services, hydrotherapy, and medical massage. You can also use your HSA for acupuncture, aromatherapy, Ayurvedic medicine, healings by Christian Science practitioners or other healers, homeopathy, nutritional consultants, and traditional Chinese medicine. Vitamins prescribed by a doctor, nonprescription medications (such as aspirin and cough syrup), and birth control pills are also qualified. Vision correction, including contact lenses and replacement insurance, eye glasses and exams, and laser eye surgery can be paid for from a HSA. A closed-caption decoder for TV, hearing aides and batteries, lip-reading expenses, modified phones, and special education are also qualified. If you need adult disposable diapers due to neurological disease, an autoette or wheelchair, braces, crutches, handicapped car controls or modifications to accommodate a wheelchair, home modifications for medical care (including elevator systems and reclining chairs for cardiac patients), mattresses prescribed for arthritis, orthopedic shoes, or a prosthesis, you can use your HSA. In addition, your HSA can be used to pay for childbirth classes, programs to stop smoking or lose weight, and treatment-related lodging (up to $50 per person with restrictions) and transportation. Dyslexia and remedial reading training are also qualified. You can even pay long-term care premiums from a HSA, and you can pay for these expenses for your spouse or any dependent family member even if that person is not covered by your insurance. All of these payments can be deducted from your income to reduce your taxes.
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