Is a Health Savings Account best for me?...

Is it one of the "best individual health insurance" coverages available these days? Are you a basically healthy person who might visit the doctor once a year ... if that? Are you the type who hates spending money on medical services you will likely never use? There are millions of people who fall into this category and for this reason Health Saving Accounts were formed.

How would you like to get some, if not all, of your money back if it goes unused? Better still the money is tax free and if you pay for it through your own business it can be a tax deduction as well.

The key words here are “Savings Account”

An HSA offers these very options and it offers a wide variety of choices to tailor a plan to fit your needs and budget.

If you ran a poll and asked people why they bought or want to buy health insurance the majority would probably say it was to avoid the big hospital bill but also have the ability to go see a doctor if needed without paying through the nose in extra monthly premiums.

HSA'a are not for everybody but they offer many advantages you won't get with other coverage choices.

What is a Health Savings Account?

Health Savings Accounts came about at the end of 2003. They are actually an improved version of medical savings account. An HSA is an account devoted entirely to health expenses and used with a high deductible health insurance policy. The concept is that high deductible insurance policies offer reduced premiums and the money saved can be put into the saving part of the plan. These monies are then used for medical fees until the deductible, if any, is met. Any unused portion collects interest tax free. The actual insurance part of the policy is used for medical problems that may exceed the deductible of the policy.

Advantages

The advantages the HSA has are numerous. Tax advantages is one of the most attractive. Unused money returned with interest. Lower monthly premiums. HSA money is portable and can be moved with you if changing jobs; and again, money not used is allowed to stay in the account earning interest. Also, after the age of 64, you can withdraw your money from the account for any reason without penalty.

Disadvantages

Nothing is perfect and yes there are actually some “disadvantages” involved with the Health Savings Account. You're allowed to put a certain amount per year into the account however if you keep it until age 64 any money that is not spent on medical needs is added to the one's gross income for tax purposes and will generate an additional 10% tax.

Additionally you must always carry a high deductible health insurance policy in place, with the deductible a minimum of $1000 for single coverage and $2000 for family coverage. There is also a stipulation that in the insurance policy out-of-pocket expenses cannot be more than $5000 for individuals and $10,000 for families.

I suggest you compare the savings versus the taxes and see if you come out ahead. Historically the advantages of this plan has far outweighed the disadvantages.

How do I get started with an HSA plan?

It's fairly simple really. Be under 64 years of age and file your own income taxes. You also must have a high deductible health insurance policy in place at the time of deposits into the HSA account. You also cannot have other health insurance at the same time.

There little doubt a Health Savings Accounts can provide lower premiums on health insurance premiums while still offering excellent protection. Used wisely it can be a great investment vehicle and provide tax benefits as well for those who qualify.

Using pre-tax dollars to pay for medical fees alone is a huge improvement. Lowering the high premiums associated with other types of health insurance, which was a stumbling block to many people’s ability to afford health insurance before, by utilizing an HSA's might be the answer to manage insurance now.

Request a health insurance quote, look at all the plan optionsand then speak with a licensed agent who can provide you with information, answer your health insurance related questions.

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