What is better than this combination? Reduce your health insurance premiums and lower your tax bill! Two simple procedures make it happen. One, you obtain a high deductible health plan that is labeled H.S.A. Compatible. This step will reduce your premium by 35-40%, from traditional plans. While this sounds like it may expose you to higher potential out of pocket expenses, it actually does not.

The high deductible plan covers all medical expenses after the deductible – this includes physician services and prescription drugs – so once the deductible is met, all expenses are covered by the insurance company. If you study the traditional policies, you will find that co-pays and other expenses persist, even after the deductible has been met. This is a clean, simple plan, offered by nearly every insurance carrier.

Step two is to establish a Health Savings Account. This is one of the best little known tax savers around. For 2009, the maximum contribution for an individual is $3000, for a family $5950. For anyone 55 or older, there is an additional $1000 catch up opportunity. These amounts are fully tax deductible. Withdrawals from the account are non-taxable. Sound good? Wait, there is more.

For those who don’t use the money in the account, it can be accumulated for post-retirement medical and long term care expenses – all with non-taxable withdrawals. The money in the account can be held at interest or invested much like an IRA or 401K. Higher taxes are coming, this one is a no-brainer; take the money you saved on premiums and put it into a Health Savings Account. Your bank probably has these accounts, so do the major insurers.

By saving receipts from everyday medical expenses, as simple as bandages, aspirin and the like, you create an opportunity for future tax-free withdrawals. There are few simpler, more effective tax deductions available today.

We can help you with information, rates and accessing both Health Savings Accounts and High Deductible Plans. Please contact us at anadolna@associatesgroupinc.com