Do you know what Health Savings Accounts are?

A Health Savings Account is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan. The funds contributed to the account are not subject to federal income tax at the time of deposit. Unlike a Flexible spending account, funds roll over and accumulate year over year if not spent. HSAs are owned by the individual, which differentiates them from the company-owned Health Reimbursement Arrangement that is an alternate tax-deductible source of funds paired with HDHPs. Funds may be used to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses are treated very similarly to those in an IRA account in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier. These accounts are a component of consumer driven health care.

They also save money for most employers, while giving workers healthcare protection. By making you a part of the medical services decision process, HSAs are designed to help you manage medical expenses and reduce the continuing raising of health care expenses. Equally as important, the money you save remains part of your retirement account, even if you leave your present employer. In short, if you don’t use all the money in your HSA for medical expenses, it can accumulate as tax-free savings for your retirement. One final benefit, HSAs can pay for many more procedures than were ever allowed before by government sponsored programs.

For more information on HSA. Click here.

Click here for information and to find HSA’s.

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Tags: Flexible spending account, fsa, hdhp, Health Reimbursement Arrangement, health savings accounts, healthcare, High Deductible Health Plan, hra, hsa, universal healthcare

2 Responses to “Do you know what Health Savings Accounts are?”

Michael Nass Says:
July 17th, 2008 at 3:17 pm
Good article. I signed up for my HSA this year and am very happy with it so far. By next year, barring disaster, I should have $5,000 in my savings account and I will probably reduce my donation from its current $100/week level. At some point I may consider getting a higher deductible to lower my premiums as well. This is the only health coverage I know of that if you plan well your costs actually decrease over time!

As an IT contractor it was very appealing to me since my coverage is now attached to me individually and will follow me if I get another job or go out on my own. HSA’s are a great option for young and fairly healthy people.
Philip Harte Says:
July 24th, 2008 at 8:37 am
They are the inability to provide health care to one and all.