You are here: Home Managing Your ... Health Care: How ... Tax Advantage Plans Such ...
Information about all aspects of finances affected by a serious health condition. Includes income sources such as work, investments, and private and government disability programs, and expenses such as medical bills, and how to deal with financial problems.
Information about all aspects of health care from choosing a doctor and treatment, staying safe in a hospital, to end of life care. Includes how to obtain, choose and maximize health insurance policies.
Answers to your practical questions such as how to travel safely despite your health condition, how to avoid getting infected by a pet, and what to say or not say to an insurance company.

Health Care: How To Save Money

Tax Advantage Plans Such As A Health Savings Account Or A Flexible Spending Account

Next » « Previous


Using pre-tax dollars gives you more to spend on your medical expenses. Tax advantage health plans allow you to deduct pretax money from your paycheck to cover out-of-pocket medical expenses. If your tax rate is 25%, your pre-tax dollar is worth a full dollar. A dollar which is taxed is only worth seventy five cents to you. To put it another way, you save $250 for every $1,000 you spend. Actually, these pre-tax dollars are worth even more because they are not subject to Social Security and Medicare taxes.

To save the most money, it is advisable to put as much money as you can into a tax advantage health plan. Savings vary by tax bracket. You can contribute money to these accounts during an open-enrollment benefits period or when you have an event such as marriage or the birth of a child.

  • If the plan is one like a Flexible Savings Account in which you lose the money not spent by year end, limit your donation to the amount you think you will spend on your health care and the other people who qualify.
  • If you have a question about  what costs are likely to be during the coming year, speak with your specialist or a knowledgeable person in his or her office.

Note all the expenses you can pay for from tax advantage plan. As a general matter, acceptable expenses are those that would generally qualify for the mental and dental expenses deduction for IRS purposes. To learn about  those expenses, click here. Also check your plan to note the different people whose medical expenses are also included.

It's getting easier to maximize use of these plans.

  • Drugstore chains generally provide receipts or customized lists of purchases that show which items qualify for tax advantaged plans.
  • Many employers automatically debit co-pays and deductibles to providers who participate in their health-care plans. You don't have to go through the paperwork or delay of submitting claims.

Please share how this information is useful to you. 0 Comments


Post a Comment Have something to add to this topic? Contact Us.

Characters remaining:

  • Allowed markup: <a> <i> <b> <em> <u> <s> <strong> <code> <pre> <p>
    All other tags will be stripped.