Because Health Savings Accounts traditionally have a higher deductible – $1100 annually for an individual â€“ the insured are thought to be learning to be more health conscious. They may be more careful about the expenses associated with health care, and vigilant against industry excesses. If true, this could be a great help in increasing and managing efficiency in the healthcare system. It benefits all when users are engaged actively in making healthcare purchasing decisions.
A Health Savings Account is a smart alternative to traditional health insurance. It’s a savings product that offers a different way for consumers to pay for their health care. The funds contributed to the account are not subject to federal income tax when deposited into the plan, and are used to pay for qualified medical expenses at any time without federal tax liability.
Established as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the Health Savings Account is a combination of features found in traditional health insurance plans married to retirement plans. The goal was a program to shield money for health care from taxes.
If you have a high-deductible health plan, consider an HSA â€“ Health Savings Account. There are numerous advantages to the plan for those who qualify. The money you deposit in the plan isn’t taxed, and you can invest it. The account owner has control of how the money is spent, so unused funds stay in the account and can be used toward paying future medical expenses.