Florida Medical Savings Accounts (MSA’s)
Florida Medical Savings Accounts (MSA’s) are special financial products that are used to pay for medical care. A person living in Florida may choose to open one of these savings accounts in conjunction with a health insurance policy to look after their medical needs. Please continue reading to get an idea whether this type of savings account used by some FL residents for their medical bills is right for you.
The Medical Savings Account is used in conjunction with a High Deductible Health Insurance Plan. Taxpayers in Florida, as well as other parts of the United States, can deposit funds into the MSA up to an annual limit set by the government. The money deposited into the HSA is tax deductible and accumulates interest on a tax-free basis.
As long as the funds in the MSA are withdrawn for eligible medical expenses, they can be taken out on a tax-free basis. If they are withdrawn for another purpose, the savings account holder is required to pay a penalty, in the same way that an IRA holder is assessed with one for early withdrawals.
Funds deposited into an MSA that are not spent on health care expenses are rolled over to the following year. Once the account holder reaches retirement age, he or she can withdraw funds from the MSA for any purpose. The plan offers the benefit of acting as a long-term investment for account holders.
A Florida MSA can be set up by an individual who is looking for medical insurance coverage, or this type of plan may be offered in an employer-sponsored health insurance plan. Unlike other group health insurance plans offered by employers, the MSA is portable. If the employee is laid off or decides to move on to another employment opportunity, he or she can take the MSA with them. This means they don’t need to deal with losing their health insurance coverage if something happens to their job.
How the Florida MSA Works
The Florida MSA works like this: The account holder deposits money into his or her MSA. The funds accumulate interest on a tax-free basis until they are withdrawn. The money in the MSA is used to pay for everyday medical expenses until the annual deductible is reached. After that point, the insurance policy will start to pay benefits.
The limits on deposits for a Florida MSA for 2009 are set at $3,000 for a single person and $5,950 for family coverage. This type of plan is a good choice for people who need coverage for major medical expenses and who don’t mind paying for everyday medical services themselves. The funds put into an MSA can be used to pay for checkups and routine office visits, prescription drugs and some types of over-the-counter medications.
What the Funds Can Be Used For
The money can also be used for dental care, eyeglasses, acupuncture treatments, transportation costs associated with medical care, and Braille books. Unlike some other types of health insurance plans, the MSA funds can be used to pay for prenatal care, immunizations, smoking cessation programs, and weight loss programs for obese patients.
Alternative medical treatments, such as those offered practitioners of homeopathy, aromatherapy, nutritional counseling, and Ayurvedic Medicine. Mental health services from a psychiatrist, psychologist, psychoanalyst, or a psychotherapist are also covered under this type of plan. The funds from an MSA can also be used to pay for the premiums for a long-term care policy.
Florida MSA Premiums
Since the MSA is linked to a high-deductible health insurance plan, the premium levels are lower than with other options. The combination of lower premium rates and a tax deduction makes the MSA an attractive option for Florida residents. People who choose this type of coverage like the fact they have more flexibility than with other types of insurance plans. As long as they are using the funds for an approved expense, they are free to seek treatment from the health care provider or hospital of their choice.
If you (and your family) are relatively healthy then your out-of-pocket expenses for medical care may be lower than the amount you are able to deposit into the MSA each year. The unused funds use the power of compound interest to grow and as long as the plan holder stays healthy, he or she can have a substantial amount of money to fund their retirement. If you still have questions about how an MSA works, or how to determine if it makes sense for your health and savings goals, call an independent agent at the number above for professional and no pressure advice.
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