Healthcare Savings Accounts: Necessary or Not?

Almost everyone that enrolls into an employer sponsored healthcare insurance plan has the option of enrolling into a healthcare savings account (HSA). These accounts allow people to place money tax free into an account for eligible medical expenses. The accounts are one solution for people that are looking to fight the increasing costs of healthcare expenses.

While these accounts became popular in 2002, there are millions that don’t know enough about these accounts to make an informed decision. There are some people that are under the impression these accounts have no real benefits. Most people are forced to take higher deductible healthcare insurance but they don’t take advantage of having a healthcare savings account as well.

What is a Healthcare Savings Account?

A healthcare savings account is an account that allows employees to deposit pre-tax dollars into it for eligible medical expenses. These accounts are available for those that have a high deductible healthcare insurance policy. Many employers also make contributions into their employees HSA accounts as well to help offset the expense of having a high deductible.

One of the biggest worries that people have when it comes to HSA accounts is the ability to access their money. When a person enrolls into a healthcare savings account, they will always have access to the money in that account. Many of these plans allow their participants to use a specially issued debit card with a Visa or MasterCard logo. When a participant has an eligible expense, they are able to pay for it immediately from their HSA account.

Are There Benefits?

The benefits of having an HSA are plenty. These are the things that most people don’t understand about having an account.

Tax Reductions- Because the money that is contributed into an HSA is tax free, it reduces a person’s taxable income. This means that people are lowering their taxes as long as they are contributing to an HSA.

Portable-A healthcare insurance account is an account that is completely portable. Those that change jobs will still be able to access their funds and use it while at another job. Many of these accounts have a rollover option that will transfer the funds into a different account if that is what the participant wants.

Investment- While this account was designed to help combat the cost of increasing health care expenses, it can be used as an investment option. The money that isn’t used in the account will stay and accumulate interest.

Available During Retirement- People that have retired with an HSA can still use it during their retirement. Because these accounts are set up very similarly to 401(k) accounts and IRAs, once a specific age has been reached, there are very few penalties for withdrawing all the funds accumulated in the account.

The cost of healthcare isn’t decreasing. Families are constantly struggling to find the money they need to pay for deductibles as well as medications and other medical necessities. HSAs are designed to help keep that money available. Those that do have a high deductible plan will have a bit of security among the rising costs of healthcare. 

Jul. 2 14'
If you still qualify for Medicaid, AND you see a docotr that takes both that kind of insurance, and the Medicaid, then Medicaid picks up your deductibles and copayments.And a Health Savings Account, and Health Reimbursement Account, are NOT insurance plans.
Jul. 7 15'


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