A deductible health insurance plan, where TAX-FREE Health Savings Accounts can be used to

pay uninsured health costs or if you stay healthy can be used as a Retirement Plan.  A deductible

health plan, attached to a Health Savings Account program, is a good option for self-employed people and small business owners, that want to provide health care at an affordable price, for themselves and/or their employees.



·   Insured’s can deposit into a tax-free Health Savings Account (HSA) to pay uncovered health care and dental costs.

·  The HSA funds set aside can be invested, and the earnings and interest are tax-free regardless when taken out..

·  Any HSA unused funds can be carried forward year to year, building up tens of thousands of dollars.

·  Withdrawals for any medical or dental expenses are tax-free.  Withdrawals in retirement are penalty-free and Tax Free.

·  Persons over age 55 can contribute even more using the “catch up” provisions allowed under HSA rules.

·  Individuals are eligible, there is no need to be part of a group health plan.

·  HSA is your personal health care account.  An HSA is not related to your employment; even though an employer can make contributionS to your HSA under the funding guidelines.



In 1977 Congress made available a similar program called Medical Savings Account – not to be confused with the 2004 passed legislation for Health Savings Accounts.  So savings accounts are not new.


If in 1977 a person had purchased a deductible health insurance plan, that required the insured to pay the first $3,000 dollars, and set aside the $3,000 amount allowed each year under the law  (to cover the deductible), the following example would apply:


If the insured had just average health, and incurs only the usual $300 to $500 a year in health care costs, which in part even with complete coverage would not fully be paid, then the balance of the $3,000 deductible each year was placed into a Medical Saving Account, the MSA would now be over $20,000.   Remember the earning and interest in any HSA will grow TAX FREE.  This is better than a 401K or IRA, where TAXES must eventually be paid when the funds are taken out.   In theory, if a Health Savings Account earns an average 8% a year, and no funds were ever used to pay for authorized medical or dental expenses, in 30 years the HSA would have grown to over $500,000 TAX-FREE money for retirement.  Again, better than a 401K or IRA account where taxes must be paid on the money taken out.


If you are self-employed, there is no better deal around.  Money can be set aside tax-free and will keep growing tax-free until you die.


Note: Some insured’s become so excited about the tax advantages in their Health Savings Account that they actually pay their uninsured medical expense with after tax funds so they can build their TAX FREE Savings Account.  The maximum amounts available to deposit in an HSA account is expected to increase significantly this year.




F. Darrell Lindsey

U. S. State Licensed Agent/Broker