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February 01, 2010
How a Health Savings Account Can Help to Protect Your Finances
If you have health insurance, you might be surprised to learn that a starling 16.6% of American adults are still uninsured, despite the high degree of attention that has been given to health insurance issues in the U.S. lately. Many American adults without health insurance are put into a tricky situation when they have a catastrophic injury or illness and are then stuck with an expensive emergency room or ICU bill. According to many, living without health insurance is a high stakes gamble that too many Americans make every day.
However, there is hope for those Americans who either can’t afford traditional health insurance or don’t qualify for health insurance plans that suit their budgets because of existing health conditions. Health Savings Accounts are available to help Americans obtain low-cost health insurance and set aside money in a savings account that can be used to pay for healthcare expenses that are not covered by their health insurance plans.
Health Savings Accounts have grown steadily in popularity since they were first created in 2003. The primary role of Health Savings Accounts is to provide participants with health insurance protection in the event that they have a catastrophic illness or injury. Health Savings Accounts are used in conjunction with high-deductible health insurance plans that have low monthly premiums that are affordable for just about anyone.
In addition to the low-cost HSA insurance plan that is associated with the Health Savings Accounts, participants establish specific Health Savings Accounts, which are savings accounts, in a sense. These savings accounts are similar to an IRA, in that the funds that a participant deposits into the savings account can be invested into high interest-yielding stocks, bonds, and other investments to help grow the savings amount. Moreover, the funds that a person deposits into a Health Savings Account are tax-deductible, which means that those funds will reduce the person’s annual tax burden.
Some individuals who have Health Savings Accounts are able to save thousands of dollars each year as a result of their participation. Here are some of the ways that Health Savings Accounts can help participants to save money:
* Contributions to a Health Savings Account are tax deductable
* Funds withdrawn from Health Savings Accounts for qualified healthcare expenses are tax-free
* Investment earnings from the funds in the Health Savings Accounts are tax-free
* Participants keep the funds from their Health Savings Account even if they move, change jobs, become unemployed, change marital status, or change health insurance policies
* Participants are in control the amount of money saved in the Health Savings Accounts, including deciding when to use those funds for expenses, and how to invest the money
* Funds can be set aside and continue to grow to use for future medical needs
* Both individuals and employers can make contributions to Health Savings Accounts
HSA Administrators (Banks, credit unions, and other financial institutions) can help Health Savings Account participants set up their accounts. However, in order to qualify for participation in a Health Savings Accounts, participants should meet the following criteria:
* They must be enrolled in a qualifying high-deductible HSA health insurance plan
* They can only be covered under one health insurance plan
* They must not be listed as a dependant on a tax form
* Participants cannot have Medicare coverage
Contact us today for more information about how Health Savings Accounts can help to save you and your family a significant amount of money each year while ensuring that you receive the best possible health care coverage for your needs.
Posted by Wiley Long at February 1, 2010 01:40 PM