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Health Savings Accounts (HSA)

It seems that the cost of health insurance is forever on the rise. Although insurance companies are constantly advertising to get new customers, some health insurance plans are still quite expensive. Choosing the right health insurance plan or benefits set can be overwhelming and may feel like a burden. To offset the unpredictable costs that come with trying to stay healthy, the Medical Savings Account systems was replaced with Health Savings Accounts (HSA). Health Savings Accounts are available to US tax-paying citizens who hold a High Deductible Health Plan (HDHP).

A HDHP offers a lower premium to its member by charging a higher deductible than other health insurance plans. In essence, you may save more money upfront by choosing this plan. HSAs are held not by the health insurance company but by the individual and may be used to pay for qualified medical expenses at any time without tax penalties.

HSAs are thought to encourage saving for future medical expenses and ease some of the strain on the American health insurance system. Due to the high out-of-pocket costs that come with HDHPs, if you choose a Health Savings Account, any preventative and regular medical care will be paid for from your own income. This affords HSA owners the option to make their own decisions about health care, giving them more flexibility and overall control of their healthcare expenses.

Unlike a Flexible Spending Account, which many plans offer to patients in addition to their coverage, HSA benefits do not vanish at the end of the year. This spending account rolls over any balance each and every year. Deposits to these Savings Accounts can be made by the plan subscriber or by his or her employer and all deposits made to this Account become the property of the policyholder no matter what their source. Like an IRA, these contributions are sheltered from taxation until the funds are withdrawn and, even then, may still be sheltered. As long as these funds are used to pay for qualified medical expenses, they will not be taxed.

As the only health plan option that can result in net gains, a carefully managed Health Savings Accounts requires a great deal more planning and paperwork on the policyholder's behalf. The amount of choices in medical care providers is almost limitless as there are no defined networks that you must stay within contrary to the more popular insurance plans. Some people would prefer a High Deductible Health Plan for financial reasons, which sometimes only covers catastrophic injury or illness. These accounts can be excellent pre-tax healthcare resources for higher-wage adults. There would be little to no advantage to choose an HDHP if your wages were under $30,000.

A Health Savings Accounts is a good choice for the individual or employee who wants ultimate control over his own medical care. Although there is more paperwork required of the policyholder than there would be in a more traditional insurance plan, High Deductible Health Plans keeps individuals cost-conscious. Health Savings Accounts have a great deal of advantages to many patients who understand and appreciate autonomy regarding their healthcare decisions.

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