The U.S. Treasury Department issued rules on tax-free savings accounts to help individuals purchase health insurance. The health savings accounts function much like 401(k) plans and were included in the Medicare legislation signed by President Bush earlier this month. Though proponents of such accounts say they will help individuals who expect high out-of-pocket healthcare expenses, opponents say they amount to tax shelters for wealthy individuals who can save as much as $5,150 in them. Contributions are deducted from taxable income and remain tax-free as long as they are used for procedures such as prescription drugs, chronic care and retiree health plans. Unspent money rolls over to the next year. Individuals must have at least a $1,000 deductible in their plans or be already contributing to an Archer Medical Savings Account -- the predecessor to a health savings account -- to qualify for such an account. -- by Tony Fong
Treasury rules on tax-free health savings accounts
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