Health Savings Plan Information
Even people with health insurance may find that they are shelling out more and more in deductibles, copayments and other out-of-pocket costs. A health savings plan, also known as a health savings account, can help defray these high costs and make it easier for consumers to budget for the health care they need.
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Flexible Accounts
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Health savings accounts are a flexible way to put aside pre-tax money for health care expenses. The money in the health savings account can be used to pay for a wide range of health care expenses, including out-of-pocket costs, deductibles charged at the doctor's office, copayments for prescription drugs and over-the-counter medications.
Tax Savings
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The money invested in a health savings account is deductible for income tax purposes, providing immediate tax savings as well as the potential for long term growth. For self-employed individuals the tax savings from a health savings account can be quite significant.
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Wide Availability
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Health savings accounts are available at many banks, and most of the major national banks have their own HSA plans available. Check the expenses and fees that apply to these plans before signing up. Some HSA plans require a minimum deposit to avoid fees and charges, while others allow consumers to open a fee-free account with only a few dollars.
Special Rules
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Health savings accounts work in conjunction with a high deductible health insurance plan. These high deductible plans cover catastrophic illnesses and accidents, while putting the consumer in charge of his or her health care. In exchange for this higher deductible, consumers enjoy lower monthly premiums. By funneling those savings into the health savings account, savvy consumers can cover their expenses and reduce their risk. When a medical expense does arise, consumers can use the money in the health savings account to cover the cost. This encourages consumers to be more aware of costs by shopping around for the best price on the medications and medical procedures they need.
Fund Accumulation
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The money placed in a health savings account rolls over from year to year, and consumers can add more money to the account each year. The IRS does place restrictions on the amount of money that can be placed into an HSA, so be sure to check the IRS website for the current guidelines before making your contribution. Consumers can add additional money each year, allowing the money to accumulate and accrue interest over time. There are no restrictions on the amount of money that can accumulate in a health savings account, and over time these accounts can grow substantially.
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