A health savings account allows you to put money aside for future medical emergencies and procedures. Declining health is a serious consideration as you age, and not all medical procedures are covered by all insurance plans. A well-funded HSA can help make sure you stay healthy in your golden years; you can also use an HSA for more immediate medical concerns and emergencies. Figuring out whether you’re saving for retirement or a more immediate need will help you choose the best HSA provider and plan for you.
Access to Your Money
Some HSAs are easier to get money out of than others. If you’re opening an HSA to put money away for retirement health-care purposes only, this probably won’t be a problem for you. HSA accounts with early withdrawal penalties sometimes offer lower monthly maintenance fees and rates. Other HSAs come with check-writing privileges and debit cards that allow you to pay for medical services immediately. If you’re opening an HSA for medical procedures you expect to come up in the near future or are using an HSA to balance a high-deductible health insurance plan, this type of HSA could be better for you.
Certain HSA plans allow you to invest a portion of the money in your account by buying stocks, bonds and mutual funds. Individuals planning for retirement may find this beneficial because it could help increase the amount of money they can save for health-related costs. The risks here are obvious. If a stock, bond or mutual fund decreases in value, so does the overall amount of money you have in your HSA. Many people find HSA plans that allow them to invest a portion of their money helpful if the account is set up by their employer and isn’t their main method of saving for medical emergencies and procedures.
HSA Providers Affiliated With Your Health Insurance Provider
Some health insurance providers can help you find an HSA provider that they are affiliated with. This could help reduce your fees and make payment simpler. However, not all plans are created equal; there may be some coverage tradeoffs like lower interest rates or less access to your money. Compare the HSA provider’s plan recommended by your insurance company with plans offered by independent HSA providers to see how they stack up.
Where Are Your Accounts Now?
If you take care of most of your financial transaction through one bank, consider choosing an HSA provider that works with your bank as a custodian. Of course you shouldn’t sacrifice major features of an HSA account like access to your money, but if an HSA provider offers a plan that looks appealing to you and it uses your bank as a custodian, dealing with your account could be more convenient. You may even be able to transfer money between your HSA and other accounts online if you need to.
Do Your Research
It might seem obvious that you should check out multiple different HSA providers and plans. However, many people choose the plan offered to them by their employer or health insurance provider. Do your research and compare plans. Make a list of what’s important to you. Decide if immediate access to your money is more important than a higher interest rate, and if convenience or coverage more important. Once you know what you’re looking for, finding an HSA provider becomes easier.
Tips & Warnings
- Many HDIP insurance providers will partner with an HSA provider. However, this does not oblige you to use that provider. You can have your HSA with any licensed HSA, whether or not they are affiliated with your insurance provider.
- Always read the fine print to know and understand the terms, features and benefits of an HAS provider before you choose to go with them.
- Blue Cross Minnessota: Health Plans 101: Health Savings Accounts
- Physicians for a National Health Program: GAO Report: Don't Choose an HSA if You Need Health Care
- Bankrate.com: 7 Tips for Choosing a Health Savings Account
- Society for Human Resource Management: Consumer-Driven Decision: Weighing HSAs vs. HRAs
- Photo Credit Photos.com/AbleStock.com/Getty Images
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