Health Savings Accounts for the Self-Employed

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If you hold a traditional job, chances are you get your health insurance from your employer. But if you are self-employed, you have no such luxury. Self-employed individuals must make arrangements for their own heath care, and buying a health savings account can be a smart move for those entrepreneurs.


Before you can open a health savings account you must first have a high deductible health plan in place. When you shop for individual health care plans, be sure to let the agent know that you need a plan that is HSA-eligible. Not all plans qualify. As of 2011, eligible plans must have a minimum deductible of at least $1,200 for an individual or $2,400 for a family.

Health Savings Accounts

Once you have your HDHP in place, you can start shopping around for a health savings account. You can find health savings accounts at a number of places, including banks, brokerage firms and mutual fund companies. Choose the administrator that offers the best range of investment options for you. Also look for an HSA that does not charge excessive setup charges or ongoing fees.

Tax Savings

As a self-employed individual, you want to reduce your taxes as much as possible. The self-employed are subject to a number of taxes not borne by regular employees, so tax savings are even more important. When you open a health savings account, you can take a tax deduction for that contribution, which can lower the amount of your self-employment income subject to taxation.

Contribution Limits

The Internal Revenue Service sets the contribution limits for health savings accounts. It is important to review those limits before you make your contribution for the year. For 2011, you can contribute up to $3,050 to your health savings account, if the account covers only you. If you have an HSA that covers your entire family, you can contribute up to $6,150. In addition to those limits, you can contribute an extra $1,000 to the HSA if you are at least 55 years of age.