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Consumer
Driven Market Report 9/13/2004
Existing IRA Forms Okayed For HSAs
Treasury Secretary
Snow told a meeting of credit union managers that they can use
existing Individual Retirement Account forms for
setting up Health Savings Accounts. Snow said that HSAs "are
really super-charged IRAs" and thus "you won't need any
new forms" although IRS now has all the forms if needed available
on their website. These include two forms filed once a year: one
form that shows contributions and another that shows how much was
spent from the HSA.
The Snow comments are one more example of how HSAs are guaranteed
to grow fast in coming years -- even if employers totally ignore
them and contribute nothing. All the soothsayer predictions about
whether employers will 'support' HSAs are really pretty funny if
you think about it.
Over 60 million Americans own IRAs, and HSAs just became the better
investment. Throw in all the possible contributions drawn out of
401ks and you're talking real money out there.
Let's face it: millions of Americans with 'high' deductibles are
going to contribute billions over the coming years as a tax break,
and secondarily as a way of providing a cushion for out-of-pocket
costs for any IRS-defined medical services. Spend it on health care?
Not if you can help it.
HSA owners still have to tell the health plan how much they spend
if they go over the deductible, but employers will never know how
much employees with an HSA have saved up, or how much they are contributing
each year to their own private HSA. Some workers will have enough
to buy their own coverage, while others will be scrimping on office
visits to fund retirement.
A large percentage of HSA owners are expected to use their own checking
accounts before tapping the tax-advantaged HSA funds, which accumulate
tax-free and can be withdrawn tax-free at retirement. Claims paid
are just as likely to come from personal checking as the HSA account.
If you have any comments on any of this don't hesitate to reply.
Story credit:
Consumer Driven Market Report return
to the "for employers" section
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