Illinois Health Savings Accounts Tax Benefits and Savings

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ILLINOIS HEALTH SAVINGS ACCOUNTS

Illinois Health Savings Accounts, often referred to as an HSA, is a tax exempt account with a financial institution of your choice, in which you accumulate savings to pay for future medical expenses. They work together with a high deductible Illinois health insurance plan. Eligible Illinois individuals and families are able to slash their federal income tax bills by making deductible HSA contributions. This will be like making deductible IRA contributions. Even better, you can qualify for the HSA break regardless of your gross income since there are no phase-out rules for high income earners like the ones that apply to a traditional IRA.

Similar plans in Illinois were previously called a MSA or Medical Savings Accounts. The new Health Savings Account tax law made several significant changes to the MSA. The plans are now available to a larger population of Illinois citizens than ever before. You deposit money into your Health Savings Account as often as you need. Amounts that have accumulated are intended to be withdrawn and used to pay for actual medical expenses, such as doctor visits, prescriptions, etc. that your health insurance plan doesn't cover until you reach your deductible.

You get a tax deduction for money contributed to the account each year. Then you pay your medical expenses by withdrawing funds from the account. If expenses exceed your Illinois health insurance policy deductible, the policy pays the additional costs. If you spend less than the amount contributed, the difference stays in the account and earns interest. No use it or lose it provision! The HSA account can have features of both a savings and a checking account, where you can have checks and debit cards, but is not a savings or checking account in the strict sense due to tax and legal regulations