A re you one of those writers who is self-employed and either single or not insured under a spouse's program? I have good news for you. Beginning back with tax year 2003, you may take as a reduction in your Adjusted Gross Income for Self-employed Health Insurance, 100% of your medical insurance or HMO Premiums, including those for you, your spouse and your children, when the premium is paid through your business.

Good news? You bet. But let's take it one step further. Have you ever looked into taking advantage of a special insurance program for the self-employed that has been available since '97, the Heath Savings Account (originally called the Archer Medical Savings Account)? An HSA works especially well for those who's constant refrain is, "Why do I pay all these insurance premiums when I never go to the doctor?"

An HSA program consists of two parts: a high-deductible health insurance policy and a separate bank or investment account.

An HSA program consists of two parts: a high-deductible health insurance policy and a separate bank or investment account. The insurance policy has to be one specifically approved by the IRS, usually with a $2,600 deductible for a single person and $5,200 combined deductible for a family. (Typically, the HSA insurance pays 100% of covered items after the deductible but has no drug card or doctor's office co-pay.) Premium dollars saved by going to the high deductible policy may then be deposited into an HSA vehicle, on a before-tax basis.

So, what can you do with the money in the Savings Account? The HSA program allows nontaxable outlays from the Savings Account for specified expenses. Dollars in the Savings Account can be "dispensed" to pay for such varied items as eye glasses, dental braces, psychologist, orthopedic shoes, even hearing aids, and maternity. If you remain fairly healthy and don't spend the money in your account, you can use your accumulated funds as your Medicare supplement (still tax free) or to enhance your retirement income (taxable) - or both.

How much can be saved? Say you're Susie Bestseller, age 34 with a husband who is 38, and have two children at home. All of you are in good health, nonsmokers, and live in Harris County (the most expensive health insurance in Texas). A typical policy with a $1,000 individual deductible, a drug card, and $25 office co-pay from a stable individual health insurer would run you, monthly, about $900. An HSA program ($5,200 family deductible) would be about $375. You could put $430 per month of your premium savings in an MSA Savings Account (maximum $5,200 per year).

Although it looks like you give up a lot with the large deductible, remember expenses are usually covered at 100% after the deductible, actually reducing liability for a major medical event from $4,000 down to $2,500 for an individual and $8,000 down to $5,200 for a family. Those writers incorporated under Subchapter S can also take advantage of the HSA programs, as well writers who are eligible for their spouse's employer's program but are very healthy and cost conscious.

This column is provided for informational purposes only and readers are cautioned to consult their tax advisor to verify the applicability of the HSA to their specific situation. Neither the author nor the Houston Bay Area chapter may be held liable for any damages arising out of the use of this information.

Chuck Emerson has penned forty-two short stories over the last two years and his second novel, a suspense/mystery. During that trek he won 1st , 2nd , & 3rd places for short story at the 15th Annual Bay Area (Houston) Writers' League Conference. Back in college, he wrote a weekly editorial page column in U.T. El Paso's The Prospector for three years. During twenty-five years as a life and health insurance agent, he's enjoyed a ring-side seat beside the lives of many complex characters.

Copyright © 2005 Chuck Emerson. All rights reserved. Used with permission.