Richard J. Harris, CPA – Newport Beach, CA

I was just reading about a new thing called Health Savings Accounts.  What these accounts do is allow a self-employed person or someone working for a smaller employer to have less expensive health coverage.

These Health Savings Accounts (also called Archer MSA’s) have two facets.  The first thing needed is a high deductible health insurance policy.  The second need is to open a HSA (which is tax sheltered just like an IRA.)  An HSA can be funded by individuals to the tune of up to $3,050 and up to $6,150 for families. 

The HSA contributions are “pre-tax”, meaning they are deducted from one’s gross wages before computing taxes – just like an IRA.  Also like an IRA, the account earnings are not taxed.  When withdrawals are made the amounts are not taxed if used for qualified medical expenses. 

The experience of some HSA families has been savings of around $3,100 per year.  This savings is due to the higher deductible amount being assumed by the insured.  A nice bonus is that the annual savings goes a long way in covering the plan contributions needed to keep the account “topped up” to the maximum limit mentioned above.

The people who benefit the most from HSA plans are individuals and families that enjoy generally good health.  Now they can better afford coverage against catastrophic health problems without suffering under the burden of high cost, low deductible health plans.  One problem in switching to a high deductible plan is it may not be possible for those with preexisting conditions such as cancer or diabetes.

While the HSA’s have been criticized for taking healthy people out of the health insurance pool, those enjoying good health are now rewarded for their stay-healthy live styles.

Rick Harris Good Advice Income Tax Advice, personal money management

I spent about a year writing a lesson book designed to teach young people money skills. After completing the book, I managed to get it approved as a text book by the Newport-Mesa School District here in Orange County, CA.

Then reality hit. They don’t teach personal finance classes anywhere in the district. Why one might ask? To this probing question, as with so many questions, there are good answers and real answers.

First, the good answers. We’re teaching Math and Science – they are a national priority. Young people are getting all the financial lessons they need at home – studies indicate that 90% of money skills are learned at home. Blah, blah, blah.

Now, the real answers. We don’t have the money to teach money skills – they are paid to teach Math and Science. We don’t have the time to teach money skills – the unions are dictating how much teaching time is available in any one day and again Math and Science are priorities. Blah, blah blah.

Now here’s what I don’t get and perhaps you may understand and can inform me. I keep hearing all about Math and Science. Hey, they are a national priority. We’re falling behind the world in Math and Science. China is burying us in Math and Science. This all sounds so important and so immediate and so critical to the future of the universe.

Now let’s confuse the situation with logic and clear thinking. A very dangerous thing in most cases.

Question: For every one thousand high school students how many will be working in fields related to Math and Science 20 years form now?

Follow-up Question: How many will be handling money, balancing check books and working with personal and family budgets?

See what I mean? Thinking too much can make you crazy.

Another Question: Based upon what you see today, are money skills being learned at home?

Get this – only three states require high schools to teach money skills. What ever will the rest of us do?

Easy answer – buy my book.

Enough said.

Rick Harris Financial Advice Money skills, personal money management

Thank you for visiting rjharriscpa.com, the website of Richard J. Harris, CPA. This site will provide my clients with quick answers to common tax related questions and issues as well as keep you up to date on all news related to your personal and business income tax needs.

Rick Harris Uncategorized Income Tax Advice, Money skills, personal money management