Health Savings Accounts

Consumer driven healthcare, which requires individuals to be more responsible for healthcare costs with higher co-pays, co-insurance, and deductibles, is becoming more common.  A Health Savings Account, also known as a HSA, is a relatively new way of saving money to deal with these future healthcare costs.

Benefits and Tax Advantages

Unlike other previous medical savings accounts, the health savings account has many different benefits and tax advantages.  Funds in these accounts can be invested like other financial vehicles into mutual funds and savings accounts.  Dollars carry over to the following year if unspent.  The account stays with you if you switch jobs.  You and the employer can put dollars into the account.

The Cons of Health Savings Account Rules

There are plenty of specific health savings account rules, as defined by the IRS, that must be adhered to, which could be considered a disadvantage.  Dollars can be put into the account tax free and withdrawn tax free if used on qualifying medical expenses.  Dollars spent on non-qualifying healthcare expenses are subject to taxes as well as a penalty.  One of the other major cons is that HSAs must be linked to a high deductible insurance plan, which means you must save enough to cover the deductible.

Some people are using HSAs as another way of saving for retirement. Some companies are replacing the previous traditional comprehensive health insurance plans with high deductible plans linked with HSAs.
Others without access to health insurance are using it to get some protection.

HSA Insurance

Do the benefits outweigh the risks?  Do you know what tests and procedures you need to have done to stay well?  It may not be right for everyone.  Is it right for you?

Find out more about Health Savings Accounts (HSAs) and other vital information in Stay Healthy, Live Longer, Spend Wisely: Making Intelligent Choices in America's Healthcare System.