Florida Health Savings Accounts, or Florida HSA s are a new and innovative approach to health care coverage. The bill that provided for the basic fundamentals of HSAs was signed into law in December of 2003 and HSAs quickly became available in January of 2004.
There are two separate parts that make up the Florida HSA structure ŭ a qualified high-deductible health insurance program, and an individual savings/investment account or tax-exempt trust. The plan works by utilizing the trust account to pay for routine medical expenses and build future savings with any money left over. All money that is not used in the course of the year remains in the tax-free account.
Allowable medical expenses under Florida HSA plans are defined by the IRS. However, the definitions of allowable expenses are generally much broader than those set by insurance companies, including services like dental and vision care. The IRS ability to designate allowable expenses may seem strange until you remember that individuals are allowed to deduct contributions made to their HSAs from their gross income, resulting in tax-free money to pay for medical expenses. This aspect of HSAs make them similar to IRAs used for the sole purpose of paying for medical expenses.
The health insurance aspect of HSAs features lower premiums than traditional health insurance. The theory is that the money saved on premiums, that would normally pay for things like co-pays on doctor visits and lower deductibles, instead goes into your Florida HSA. Proponents of HSAs also point out that the structure also re-introduces market forces into the health care equation, giving consumers an incentive to compare prices and service, and to only seek health care when it is actually a necessity. This theoretically will cause medical professionals to compete and act as a mechanism to halt spiraling health care costs.
Make sure to check out more information on Florida HSA eligibility, requirements, tax advantages, contributions, medical expenses, and coordinating benefits offered on our site to find out more about an exciting new type of health care coverage.