HSA MEC
A Powerful Way to Supercharge Your Health Share Plan
Interested in contributing to a health savings account but you’re in a health sharing plan that isn’t HSA-eligible? Then the HSA MEC may be the solution for you.
Until recently, it was impossible for most people to combine the benefits of health sharing with the tax benefits of contributing to a health savings account. At last, those days are over – thanks to HSA MEC.
Here’s why:
HSA MEC is an innovative, affordable HSA-eligible health insurance policy that you can purchase alongside your current health sharing plan.
When you add HSA MEC to your existing plan, you are immediately eligible to contribute or accept employer contributions to your health savings account.
This is important because these pre-tax contributions provide a tax benefit worth potentially thousands of dollars in the first year.
HOW IT WORKS
1. Enroll in a health share plan.
- Note: You may already be enrolled in one! HSA MEC works with any health share plan, except for HSA SECURE.
2. Enroll in the HSA MEC.
- When you enroll, an HSA account will be established for you. It’s up to you (and possibly your employer) to fund it, though.
3. Contribute to your health savings account.
- And enjoy the many tax benefits that HSAs provide, both in the current tax year and in the future.
What is the HSA MEC?
The term “MEC” in HSA MEC stands for “Minimum Essential Coverage.”
Under the Affordable Care Act, “Minimum Essential Coverage” refers to the basic requirements for a health insurance policy to qualify as a high-deductible health plan under the Act.
Typically, these minimum essential coverages focus on things like preventative care and screenings.
The HSA MEC, offered through HSA For America, is a “limited value plan” that is specifically designed to provide these basic benefits, and also qualify policyholders to contribute to an HSA, all at the lowest possible monthly cost.
LEARN MORE: How Much Can an HSA Save in Taxes?
Note: To enroll in HSA MEC, you must own a business, be an independent contractor, or have verifiable self-employment income.
To enroll in HSA MEC, contact your Personal Benefits Manager.
If you’re not already an HSA For America client, we’d love to have you as one! It’s easy! Simply make an appointment for a FREE consultation with one of our expert Personal Benefits Managers.
HSA For America is the nation’s leading independent expert on health sharing plans and combining health sharing savings with the powerful tax advantages of health savings accounts.
Why contribute to an HSA?
- Tax Deductions on Contributions: Contributions reduce your taxable income, lowering taxes in the current year.
- Tax-Deferred Growth. No taxes on interest, dividends, or growth as long as the money remains in your HSA.
- Tax-Free Withdrawals for Medical Expenses: Withdrawals for qualified medical expenses are tax-free.
- Retirement Benefits: After age 65, there are no penalties on withdrawals. Withdrawals for medical expenses and certain long-term care insurance premiums are still tax-free.
How Much Can You Contribute to an HSA?
As of [year}, you can contribute up to $4,150 for self-only plans, and up to $8,300 for families.
Those age 50 and over can make an additional “catch-up” contribution of $1,000 per year.
How Much Can You Save By Adding HSA MEC?
Let’s take a simple example: Let’s assume you are married and in the 33% federal income tax bracket. We’ll ignore state tax effects for now.
Suppose you sign up for HSA MEC. Depending on your age and other circumstances, your monthly premium may amount to about $75 per month, or $900 per year.
But by adding HSA MEC to your health plan, you now qualify to contribute up to $8,300 to your HSA.
That means you can reduce your taxable income by that same amount by contributing the maximum to your HSA. If you are in a 33% average tax bracket, that means you would realize $2,700.67 in federal tax savings in the current year.
At year end, when you file your taxes, your net tax benefit is $2,700.67 – $900.
Savings: $1,800.67.
That’s a pretty good 12-month ROI.
If you are over 55, you could save an additional $333.33, thanks to the additional “catch-up” contributions.
If both you and your spouse are over 55, you can save an additional $666.67.
That’s just the tax benefit in the very first year of maxing out your HSA contributions in the 33% tax bracket.
I’m a Business Owner. Can I Offer This to Employees?
Yes! The HSA MEC works extremely well for small groups and even for larger ones. Especially if employees can afford to contribute significantly to an HSA, or if you are willing to contribute on their behalf.
Your contributions to employee HSA’s are fully tax-deductible as a business expense. The benefit is not taxable to employees. And you can also save money on the employer share of payroll taxes by making pre-tax contributions to your employees’ HSAs.
For Further Reading:
HSA Insurance Plans | How Health Sharing Can Expand Health Care Freedom | Higher HSA Contribution Limits Allow You To Save Even More on Taxes
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