What is a Health Care Savings Account (HSA)?

With an HDHP, health savings accounts (HSAs) can provide long-term financial benefits. An HSA is a member-controlled account that allows members to set aside pre-tax dollars for medical expenses not covered by their HDHP or other insurance, providing substantial investment potential for retirement needs or future needs such as college costs.

For an HSA to apply, you must have an HDHP. Your employer and others can contribute pre-tax funds into it for you; any unused funds carry over year to year so you can use them later if desired. Any investment income generated from HSA funds is tax-free as well.

An HSA is part of an emerging trend called consumer-driven health care, in which you have more control over your medical costs and can find savings strategies tailored specifically to your situation. HSAs play an integral part of this movement by providing an outlet to cover any out-of-pocket health costs not covered by your high deductible plan or any other form of coverage.

Example: With individual coverage having a $7,500 deductible and $18,000 deductibles for family coverage, most health care expenses must be paid out of pocket until your annual deductible has been met. An HSA provides you with an excellent way to save money on items and services such as eyeglasses, copayments and over-the-counter medications that you will likely require anyway.

An HSA can also reduce your out-of-pocket expenses when retiring, providing tax and penalty free withdrawals if used to pay for qualified medical expenses after age 65.

At its heart lies HSAs’ primary advantage: you own them! Unlike flexible spending accounts (FSAs), which are owned by your employer, an HSA belongs solely to you; when leaving a job or switching health plans you can take it with you. Furthermore, an existing HSA may even be transferred over to another plan provider who allows continued investing of assets in an HSA account.

HSAs can be an ideal way to effectively balance health care and retirement savings together. By pairing the HSA with direct primary care (DPC) providers that charge flat monthly fees for routine visits without unexpected bills, combining an HSA with DPC can help people manage both everyday health needs as well as save for future health expenses.

作者: admin