The Underrated Retirement Benefits of a Michigan HSA You Need to Know About

As I work with clients in the state, I think a quick background on HSA's is needed again.

Retirement planning is a critical aspect of financial management, and people have differing opinions on the best retirement account to choose. While some believe that 401(k) plans are the best due to the employer match on contributions, others argue that Roth IRA's tax-free withdrawals make it a better choice.  

However, there's one retirement account that's often neglected in such discussions – and that is a Michigan Health Savings Accounts (HSAs). Even though HSAs aren't classified as retirement accounts, they're becoming popular among savers due to the exceptional benefits they offer. Here's what you need to know about HSAs to determine if it's the right fit for your retirement planning. 

 

Understanding the Mechanisms of a Michigan Health Savings Accounts (HSAs) 

Health Savings Accounts (HSAs) are an attractive option for people who want to save for healthcare expenses, and in recent times, for retirement costs too. The account works by allowing individuals to make tax-advantaged contributions, which can be withdrawn at any time. However, to be eligible to contribute to an HSA, you must have a qualifying health insurance plan. 

For the current year of 2023', individuals with an individual health plan that has a deductible of $1,500 or more can contribute up to $3,850 to their HSA, while those with a family plan that has a deductible of $3,000 or more can contribute up to $7,750. If you're aged 55 or older, you can add an extra $1,000 to these limits. 

 

Advantages of Utilizing a Michigan Health Savings Account (HSA) for Saving 

Health Savings Accounts (HSAs) offer a range of benefits, including three significant tax advantages. Firstly, the contributions you make to an HSA reduce your taxable income for the year, similar to a traditional IRA or 401(k) contributions. For instance, if you earned $50,000 in 2023 and made a $5,000 contribution to your HSA, the government would only tax you on the remaining $45,000 when you file your 2023 taxes. This not only lowers your tax bill but could also place you in a lower tax bracket, providing additional tax savings. 

 

One of the significant benefits of using Health Savings Accounts (HSAs) is that they offer three tax advantages.

Firstly, any interest or earnings you earn on your HSA funds grow tax-free. Secondly, you receive tax-free withdrawals when you use the funds for qualified medical expenses at any age. By doing so, you may potentially avoid taxes on your HSA funds entirely if you reserve them for medical costs. 

However, if you use your HSA funds for non-medical purposes, you'll have to pay taxes on them plus a 20% penalty if you're below 65. Although the penalty is relatively steep, you can still make withdrawals for non-medical purposes. When you turn 65, your HSA functions like a traditional IRA with the added benefit of tax-free medical withdrawals. 

Another significant perk of HSAs is that they don't have required minimum distributions (RMDs), unlike most retirement accounts, where the government requires individuals to take annual withdrawals beginning in the yeah they turn 72. This allows you to keep your money in your HSA account without having to make withdrawals that could potentially increase your tax bill during retirement. 

Lastly, some employers offer an HSA match, similar to a 401(k) match, where your employer will contribute money to your HSA when you do so, up to a specific percentage of your income. While HSA matches are less common than 401(k) matches, they're worth taking advantage of if you're eligible for one. 

 

Maximizing Your HSA Benefits: Tips and Strategies 

While dipping into your Michigan HSA account for medical expenses is understandable, it's important to avoid doing this if you're planning to use the funds for retirement. It's best to budget separately for medical costs, preferably in another savings account. 

Keep in mind, investing your HSA funds is another strategy to consider. Check with your HSA provider to see if they offer this option, and switch to a provider who does if not. Investing may accelerate the growth of your money compared to keeping it in a basic bank account. 

Remember to stay updated on the eligibility requirements and contribution limits each year. It's possible that you'll be able to save more money in your HSA in the future, but only if your health insurance policy allows it. If you contribute more than what's permitted, you risk getting into trouble with the IRS. 

Please remember, our agency is not a CPA or do we give out investment advice. If you are interested in a HSA here in the state of Michigan, please ask any your questions to licensed CPA or investment advisor.

Health Alliance Plan and BCBSM Will Not Renewal Non Compliant Health Plans

Not surprisingly to me to me, Blue Cross of Michigan and also HAP are not going to extend their health insurance policies that will not satisfy the completely new healthcare law requirements.

Nevertheless, if on the BCBSM Keep Fit program, they are going to extend that through 14'. That is the only Blue Cross of Michigan plan they are permitting this for.

While President Obama did extend the opportunity for states to enable the companies to retain their pre-plans for an additional 12 months, numerous companies have rejected. To much capital has been spent shifting clients to modern "approved programs."

We at the firm realize the irritation on a lot of levels. Come 1/1, various health carriers will have their metallic plans within the Marketplace, however have plans outside of the Marketplace additionally.

Need help with your options.  Email us today to learn more.

Can I Pay My Michigan Health Care Premiums With My HSA Funds?

Pretty basic question, but you would be surprised on how many times I am asked.  Again, can you pay your Michigan health insurance premiums with funds that you have saved in your HSA savings account?

The answer is quick and simple, and that is no.  If you do withdraw money from your HSA savings account to pay for your premiums, that will be a penalty and you will pay taxes (consult a CPA to learn more). 

Their are some exceptions, which include:

1) Qualified long-term care insurance; or 2) Health insurance while you are receiving federal or state unemployment compensation; or 3) Continuation of coverage plans, like COBRA, required under any federal law; or 4) Medicare premiums.

Within our agency, we stay away from any tax questions as we prefer your local CPA to help you with that. 

To learn more about a Michigan health savings account, make sure to contact us today.

-Randy

Study Shows Michigan Has Third Least Competitive Health Insurance Market

I guess that AMA had some tough things to say about the Michigan health insurance Market.  Within this article, they explain their position.

To me as a broker, I feel the state is very competitive within the health insurers that broker here.  Now, at points do these carriers adjust their premiums here?  Well that answer would be yes.  Even I would admit at any point only a select few are priced to sell here.

What you will see is the AMA discussing Blue Cross at heart with the proposal that would turn them into a non-profit mutual health insurance company.  This has been discussed at heart, and we will see where this goes with regards to BCBSM.

As I said, to me at this point (no one knows the future) the state of Michigan has very competitive options for consumers and their Michigan health insurance needs.

Michigan health insurance - Child health insurance

Well, it was inevitable.  The last company within the state (HAP) has now decided that they are not going to be issuing policies for children only.  For a while HAP and HealthPlus were trying to stay alive with regards to this provision of guaranteed issue coverage for child, but as you can see both gave up.

If you are in Michigan and looking for child only coverage, I would do one of two things.  I would look at the MIChild coverage (keep in mind that program is based on income), and/or I would look at specific programs (if any) within your county.

Michigan Health Insurance Exchange - Out Of Time?

Reading reports, you had to expect this.  It is said that Governor Snyder has basically handed over the deal to Washington to see what they can do for the state.  It will be interesting to see what happens.

As a health insurance agent, I also will be curious to see what or how this "online" government site works.  At Michiganhealthbroker, INC. , we work with all of the major health insurance companies within the state, or who is left.  So how is the exchange going to help consumers within the state?

I would love to do a poll on what consumers of the state expect as Obamacare approaches.  I can tell you that their are good aspects, and very poor aspects off the law that are starting to take effect.  But what do the prospects off this state want with this exchange.  Would you rather talk to an agent and respect his choices for you, or take responsibility on your own when it comes to buying your own Michigan health care?

Snyder apparently wants a "state driven plan", and all politics aside, you could not convince me that their is a difference.  

Michigan Consumers To Receive Rebates From Health Insurance Companies

Surprising enough to me in this article, Michigan consumers are set to receive 13.9 million in rebates from health insures from the state.

That is correct, over 114,000 consumers in Michigan will receive rebates based on certain health insurance carriers that they have.  This is based on carriers spending more on admin costs, then what was allowed by the initial stages of the health care bill.

So how much?  According to numbers around a rebate of $214 by 8/1/12.  Again, this changes based on if you bought individual health insurance, or covered by group coverage.  If covered by group, your rebate could possibly be a little higher.

Keep in mind if you have BCBSM, you will not be eligible for a rebate based on the DFP article.  Most of the carriers who will be sending rebates are out of state carriers.

Randy

Refer Kids to the MIChild health insurance program and make a little $$

Child only Michigan health insurance plans basically disappeared after the health care reform act passed.  Well, if you know of any kids with parents who are low income, refer them to the MIChild program make a little extra money.

Maternity Coverage with your Michigan Health Insurance plan

Looking for maternity coverage with your Michigan health insurance plan?  If you are, you have probably been looking for quite sometime.

Over the past 12-18 months, many of the major insurers within the state have dropped maternity coverage from their available benefits.  However, all is not lost.  We do offer a health plan with 100% maternity coverage (after your deductible obviously).

A little bit about this plan.  It is underwritten, and it is a HMO.  Being a health maintenance organization, you must use their primary doctors and if the need for maternity arises, their OB/GYN's.  Little bit different as most of our Michigan health insurance plans use the ever popular Cofinity network within the state.

Contact us to learn more.

Michigan Small Business Group Health Insurance Worries Business Owners

A really good press release from the Michigan Business and Professional Association came out today with regards to how Michigan small business owners anxiously are awaiting how health care reform turns out.

I believe the PR expresses the core believes on the major concerns.  Those concerns basically revolve around cost.  One of the major clauses in the HCR act was to have employees covered by small business owners at all costs.  If not, the owner of the business would face a fine (tax).

The major point in the press release that catches my eye is the "Among the 24 percent who admitted they had considered cancelling their group health care insurance in the past year, 67 percent stated that it is due to dramatically increased health care premiums."  That to me is a staggering amount of clients who dropped their group plans.  That also proves to me that business owners are going to have one heck of a problem once the reform law kicks in and affordable Michigan group health insurance plans are hard to come by.

One thing is for certain though, as Obamacare is far from set in stone.  I am sure as 2014 approaches, more legislation is going to be taken in or out of the plan.