Enrollment in health savings accounts went from more than 1 million accounts in March 2005 to 11.4 million accounts a year ago, according to America’s Health Insurance Plans. People can put pre-tax dollars into an account to pay for the out-of-pocket expenses of a high-deductible health plan. The popularity of HSAs has to do with its tax advantages, portability between jobs and roll over year to year. People can build up their accounts to be used in retirement. Withdrawals for non-medical procedures will be taxed as ordinary income and subject to a 20% penalty up to age 65. Retirees can use HSA balances to supplant retirement income because it’d be no different than a traditional tax-deferred account. Some advisors suggest workers put the maximum contribution in an HSA and pay themselves back for medical expenses they had while building the HSA.
The IRS still has the authority to impose fines on nonfilers.
Insurers have may defenses. One problem: The bad guys know about the defenses.
The law affects access to policy loans for insureds who are getting LTC-related accelerated death benefits.
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