Regarding Froma Harrop’s article, “On health care, the choice,” the author mentions health savings accounts with high deductible major medical insurance plans that are “married” to a tax favored savings account (HSA). One can “tap” the health savings account to pay for “smaller” medical expenses.
This concept works well because one is paying for medical expenses with a pre-tax dollar vs. an after-tax dollar. Example: Assume that one has a medical charge of $150 and has to pay with an after-tax dollar — one has to earn $194 to pay the $150. This is how it works: One earns $194 and pays 7.5 percent to Social Security or $14.55; and has to pay a “minimum” income tax of 15 percent or $29.10. This leaves $150 to pay for the medical services.
It is interesting to note that health savings account contributions are tax deductible to the contributor. And further, if one has a balance in his/her health savings account at the end of the year, that money remains with the owner of the health savings account and continues to earn interest.
Lastly, health savings accounts may be set up in local banks, keeping that money in North Central Washington.
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