Wednesday, May 31, 2017

Obamacare, Trumpcare … either way you win with this tax break!

Congress and President Trump continue battling over replacing Obamacare (ACA) with the American Health Care Act (AHCA).

The House narrowly passed its version, 217 to 213, on May 4. Now it’s with the Senate where resistance is building from both sides of the aisle.

Several senators have cited the CBO’s estimate that the AHCA would lead to 23 million more Americans uninsured by 2026. What’s more, insurers could charge less-healthy people higher premiums.

The report also found that effective 2019, the GOP plan would "directly alter the premiums faced by different age groups, substantially reducing premiums for young adults and raising premiums for older people." 

However, the majority of both sides agree one point:

Keeping Health Savings Accounts

Health Savings Accounts (HSAs) were created by the Medicare bill President George W. Bush signed on Dec. 8, 2003. They’re designed to help individuals save for qualified medical expenses that come with high-deductible health plans.

Eligible expenses include: doctor’s visits, prescription drugs, dental care, long-term care insurance premiums, COBRA premiums; and Medicare Part B, Part D, and Medicare Advantage premiums.

HSAs give you a rare triple tax break:

1. A tax deduction for the amount you put in.
2. The money can be invested and grows tax free.
3. Withdrawals are tax-free when used to pay qualified medical expenses. 

Just because you have a high-deductible health plan doesn’t mean you qualify for a HSA ...

Your plan must have a deductible of at least $1,300 for individual coverage and $2,600 for families. The maximum out-of-pocket for these plans are $6,550 for individuals and $13,100 for families.

You can contribute up to $3,400 for single coverage, or up to $6,750 for family coverage.

Suppose though, that you save nice chunk of money in a HSA while working but don’t have many health care expenses in retirement? No problem. At age 65 or older you can take taxable withdrawals and use the money for anything you want. 

For further details, see IRS Publication 969

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