Health savings accounts

A potentially lucrative personal health account, called a Health Savings Account, becomes available to U.S. citizens next month. It will allow investors to accumulate tax-advantaged funds for medical spending. Leading health care experts such as Greg Scandlen of the Galen Institute claim these types of accounts have the potential to become the dominant form of health care in the next five to 10 years.

One of the few requirements is that the accounts must accompany a health insurance policy with a deductible of $1000 or more per individual ($2000 or more per family). The accounts are designed in part for consumers to pay incidental medical expenses leaving the high deductible insurance policy for major medical expenses.
 

• The maximum tax deductible contribution allowed per year is $2250 per individual or $4500 for a family.
   
• Families with low annual medical spending might find that the account saves them money since unused funds would accumulate tax free for later use.
   
• Qualifying high deductible policies are required to come with a maximum out-of-pocket limit making it lucrative to those with higher than average bills as well.
  
  Accounts are allowed to be invested in a wide array of investment vehicles and can build up for use later in life when medical needs are greater. Anyone can open one of these accounts so long as they are under 65.
  
  Source: Thomas A. Fogarty, Health Savings Can be Tax Shelter, USA Today, December 5, 2003.
  
  For text http://www.usatoday.com/money/perfi/taxes/2003-12-04-mym_x.htm
  
  For more on Health (Medical Savings Accounts) http://www.ncpa.org/iss/hea/
  
  FMF Policy Bulletin\9 December 2003