How Medical Savings Accounts Work
for the Self-Employed

Until now, the self-employed have always gotten what's left over after Congress had done for everyone else.

Until now, the self-employed have always been discriminated against in the tax law.

Now with HSAs (Health Savings Accounts), that's all changed.

For the self-employed, HSAs are the most radical health care reform since World War II.

New Tax Law:
Health Savings Accounts are part of the recently passed Medicare Drug Bill. Health Savings Accounts are available to anyone who has the corresponding high deductible health insurance. Deposits to the account are 100% tax-deductible, and money used for medical expenses is tax-free.

Benefits for the Self-Employed:
The important break is for the self-employed, who have previously been left behind in the tax treatment of health benefits.

Many self employed find insurance too expensive, so they do without. And the self-employed have been severely penalized with unfavorable tax treatment. It's all changed!

New EVERYONE:

$$ into HSA = 100% tax deductible

For the Self-Employed:

$$ into HSA = 100% tax deductible

$$ into health premium = 100% tax deductible

Limit:
Unlike the pilot project known as MSAs, there are no limits either by number of accounts or a "sunset date." HSAs are permanent and are a great tax-break!

To get the tax exemption, the anyone must carry a high-deductible policy that falls within the definitions prescribed in the new law. The traditional high-deductible policies commonly won't qualify.

Under the law, the tax-exemption for savings account deposits is pro-rated by the month. To get the full exemption for the year, the person must have proper high-deductible coverage in force for all 12 months. Miss one month, you lose 1/12 of the year's tax exemption.

• Single*...........................................$2,900.00 tax exempt
• Family (individual plus one)*.......$5,800.00 tax exempt
• *Accompanied by qualifying high-deductible insurance for big medical bills.

Who Qualifies?

• ANYONE!

  For the AFFFORDABLE MEDICAL EXPENSES, the tax break is everything!

  Tax-exempt deposits to HSA

  Tax-exempt accumulation

  Tax-exempt interest

  Hooray!

  In 2005, the tax break is earned by the month. The person who joins July 1 gets only half of the available tax break.