Understand the Benefits of a Health Savings Account
Because Health Savings Accounts traditionally have a higher deductible – $1100 annually for an individual – 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.
Portability is certainly an advantage of a Health Savings Account. The account can be transferred from one managing agency to another. Most Health Savings Account programs provide first-dollar coverage for preventative care, such as annual physicals, immunizations, well-baby/child care, mammograms, paps, and certain cancer screenings.
Funds contributed to the Health Savings Account can be rolled over from year to year, so there is no urgency to use the money unnecessarily. This means growth in the savings for the account owner, and these funds accumulate tax free for future medical expenses. The account holder can withdraw his savings from the Health Savings Account after turning age 65 without paying any taxes or penalties. And all contributions to this account are made initially without being subject to federal taxes, so the Health Savings Account is tax free whether at contribution, withdrawal, or when used for qualified medical expenses.
With rising healthcare costs, the Health Savings Account provides protection against the expenses associated with illness and injury. It is a unique savings product and an alternative to traditional insurance plans. The tax advantage of a Health Savings Account make it worth considering.