Tax tip: Health savings accounts now favored option for insurance

Uticaod.com

Within the last few years, health savings accounts have become the favored option for health insurance between employers and employees. Health savings accounts work in conjunction with high deductible health insurance plans that lower costs for employers and help individuals build up a savings account for current and/or future medical expenses. Contributions to these accounts are 100 percent tax deductible regardless of your income level. Withdrawals to pay qualified medical expenses are never taxed. Withdrawals, however, for non-medical expenses come with a large penalty (until age 65). Unlike flexible spending accounts, unused money in the savings account isn’t forfeited at the end of the year; it continues to grow tax deferred until it is needed.