The Health Savings Account Debate
By Wiley Long
President - HSA for America

In particular, the recent introduction of Health Savings Accounts to the public, and their enthusiastic promotion by the Bush administration, has spawned an interesting debate between supporters and critics of HSAs.  A contentious new topic of discussion, the hullabaloo surrounding Health Savings Accounts shows that Americans do have strong opinions when it comes to their health.

It seems many people are interested in learning more about what a Health Savings Account can do for them.  Is it a good option for you?  Should the everyday American be concerned about access to healthcare if HSAs grow in popularity?

Many detractors of this new healthcare option warn that only young, healthy, financially stable people with good jobs benefit from HSAs because they are the only ones who can afford it.  Health Savings Accounts must be opened in conjunction with a high deductible health insurance plan, either through your employer or through the insurance company of your choice.  The argument is that the average person can't afford to deposit the minimum annual amount required for a Health Savings Account and pay a higher deductible.

But in reality, the amount you invest in a Health Savings Account can be deducted from your annual income tax calculations. In addition, once you deposit that money into a Health Savings Account it is left to grow tax free, safe from the taxman - even when you make a withdrawal, if it is for a qualified medical expense.  This perk is not a tax haven created solely for the rich but can benefit anyone for whom lower taxes mean more money in the bank.  And the annual deposit you make into the account can be as high as your insurance deductible - you are free to use the amount deposited for that year's deductible payment as well, after which point the insurance kicks in and covers any added expenses you may accumulate for the rest of the year.

Although high deductible insurance coverage may seem more expensive at first, most people save thousands of dollars over time due to the low monthly premiums that inevitably come with this type of insurance plan.  The money you invest in a Health Savings Account is not static either - tax-deferred interest is calculated on the deposit, stretching your money and making it work for you.  You are also free to invest the money to make it grow, but of course, this option does involve some risk.

On top of all this, you are allowed to use the money in your HSA for a wide range of medical expenses.  Normally insurance policies only cover certain medical bills and health items, but HSAs allow you the flexibility to pay for preventive care, such as dental checkups and other medical appointments, as well as prescriptions, contact lenses and other such necessities that are usually funded out-of-pocket (see a complete list of HSA qualified expenses).  If you don't use all the money in your account throughout the year the amount rolls over to the next calendar year and will continue to earn you interest.

While Health Savings Accounts may not be suitable for everyone, many Americans can save a lot of money on healthcare by switching to such a plan, and should regard the advent of this new choice with interest rather than apprehension.

Health Savings Accounts and the Future of Healthcare

Some warn that the growing use of Health Savings Accounts could potentially lead to the loss of employer-sponsored health insurance altogether.  The worry is that everyone will be left to fend for themselves in order to cover healthcare expenses and most people won't be able to foot the bill.  But this is not likely to occur.  As of now HSAs must be used along with an insurance plan, and most people deciding to switch have been offered the choice by their employers.  As insurance rates continue to rise, more companies are drawn to HSAs because they save money through this type of coverage as well.  But company-sponsored health insurance is not in danger of disappearing.  Even with Health Savings Accounts becoming more popular, the easiest and most efficient way to administer even this kind of insurance package is through the employer.

Overall, hopes are high that Health Savings Accounts will make the healthcare system as a whole more accessible and affordable.  As the individual takes on greater responsibility for the cost of healthcare, prices should remain low rather than rise at an exponential rate.  From the most optimistic viewpoint, patients paying medical bills and seeing the real price of their medical care will fuel healthy competition amongst doctors and hospitals and ensure that quality healthcare is provided for a reasonable price.  And as Health Savings Account holders reach the age of retirement, the unused savings accumulated over the years can be withdrawn and used for anything they need, whether or not it is a healthcare expense.  In the future, more and more self-employed people will most likely flock toward this type of savings account in order to reap the benefits that come with consistent access to healthcare coverage.  More flexibility and choice are also factors that will likely contribute to HSAs growing in popularity.

Of course, HSAs are not a panacea for all the problems that plague the current healthcare system, but their continued usage has the potential to foster greater accountability within the medical field.  Healthcare issues are complex and cannot be governed solely by the institution of a single healthcare scheme, but even the smallest change for the better can make a big difference in the lives of individual Americans and their families.

HSA for America is committed to making it easy for people to learn about and set up a health savings account that best meets their needs at the lowest premiums available.  Whether you are looking for HSA information, have questions about which health insurance company to choose, or what HSA administrators offer the best options for your investments, HSA for America is here for you.

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