A new report estimates that Health Savings Accounts (HSAs) have grown to over $14 billion in assets and the number of HSA accounts has increased to nearly 7.1 million.
“It takes a while for any new tax favored benefit to gain acceptance,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance. “As more people have balances in their HSAs, we anticipate that more will use the funds to pay for long term care insurance.”
According to data researched by Devenir an investment firm that specializes in providing investment options for HSAs, the average account balance for the first half of 2012 grew to $1,996 an approximately 10 percent increase over the prior year. “Few people are aware that long term care insurance premiums may be paid from a Health Savings Account up to the IRS limits set each year,” Slome one of the nation’s leading long term care insurance experts explains.
For 2012 the Internal Revenue Service has established a limit of $350 for an individual age 40 or less and $660 for someone who is more than 40 but not more than 50. “The average age when individuals start buying long term care insurance is mid 50s according to Slome. “At younger ages the costs are lower and using a tax-advantaged HSA account to pay for some or all of the coverage is a tax-smart planning idea,” Slome acknowledged.
The Association notes that in recent years more small and mid-sized businesses have been offering long term care insurance to their employees on a voluntary basis. “I’ll bet few know they can have employees use their HSAs to pay for this benefit,” Slome notes. “But over time awareness will grow as will the number of people taking advantage of this protection.” The growth of long term care insurance sales to small businesses is attributed to special tax incentives now being offered as well as access to discounts and some health underwriting concessions that vary from one insurer to another.
For more information, connect with a member of the American Association for Long-Term Care Insurance. The organization serves the public by educating Americans about the importance of planning for the risk of needing long term care. For additional information on long term care insurance costs or to connect with a specialist member of the Association call (818) 597-3227 or visit the organization’s website.
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