Health Savings Accounts

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You may have the opportunity to participate in a health saving account with your employer. If you do, it could save you a bundle of money.

Around this time every year, when employees are given the opportunity to change their health insurance providers, they can also elect to set aside a number of dollars from their paychecks for the year in a health savings account. The benefit of such an election is that the money is removed before taxes have been taken out (they are pre-tax) and consequently worth more than after-tax dollars. It is similar to the situation of 401(k) dollars, which are squirreled away before the feds have taken their share.

The HSA money can then be spent on most anything to do with health care: doctor appointment co-pays, prescription co-pays, dentist visits, new glasses at the optometrist, and even certain over-the-counter medicines.

The one thing to be mindful of is that the dollars must be spent in the specific calendar year in which they were set aside. That is, 2009 dollars must be spent by December 31, 2009. Any dollars that remain in the account at the end of the year are simply gone and apparently spent by the HSA administrator (a separate entity from your employer) on a lavish party with an endless buffet.

So there must be a good attempt at anticipating health care needs in the coming year. Last year, knowing that expensive dental work was upcoming, we aimed a little high. This year, we'll aim a little lower.

If we must, we'll stock up on antihistamines and contact lens solution to make up the difference.

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