Health Savings Accounts Pay For Medical Care
Posted by adminOften, when people lose their job, they also lose their medical coverage. What can you fall back on when you lose your job, and have medical expenses? You can use a Health Savings Account to pay for medical expenses, and it is yours to keep when you’re unemployed.
According to The Wall Street Journal, almost half of U.S. small businesses offer no health insurance benefits at all due to the high cost of insuring employees. Health Savings Accounts give these employers a more economical way to help employees with medical costs. Even though you have control of your HSA, your employer can still make contributions to it.
Unlike a flexible spending account, which does not earn interest, money in a HSA earns tax-free interest so the balance can grow faster than accounts in which earnings are taxed.
If you don’t spend the money you contribute to a flexible spending account each year, you lose it at the end of the year. With a HSA, all unused funds and interest are carried over from year to year without limit.
Health Savings Plans Have Tax Advantages
The benefits of a HSA are not just realized while you’re saving for future medical expenses. When you pay for qualified medical expenses, withdrawals from a HSA are tax-free, and contributions to a HSA are tax-deductible.
In 2010, individuals can contribute $3,050, and families can contribute $6,150 to a HSA. Contributions can be made with pre-tax dollars through your employer, or you can take a tax deduction if you pay for medical expenses with post-tax dollars.
Your HSA is under your control because you choose the types of investments you want to make your money grow. Certain banks allow you to transfer funds from your checking or savings to your HSA through a secure website.
Paying for qualified medical expenses from a HSA is easy because you can pay medical expenses online from your HSA. You can also get a checkbook or debit card that is linked to your HSA. If you pay for healthcare out of your pocket, you can pay yourself back from your HSA. Just keep receipts to prove that the expenditures are legal.
When you retire, any unused HSA balance can be withdrawn like an IRA so you win whether you do or don’t have medical expenses.
HSA Health Plans Come with Lower Insurance Premiums
Many healthy people are dropping health insurance coverage, or switching to bare-minimum policies to lower monthly premiums. Certain of these high-deductible health insurance plans are qualified to work with a HSA. Insurance companies offer these types of plans with lower monthly premiums because the high deductible means they won’t have to pay for frequent, numerous small claims.
You can use the money in your HSA to pay for health care costs until the deductible is met. If you have no medical expenses, you’ve saved that money instead of paying it to an insurance company as higher premiums just in case you might have medical fees. High-deductible health insurance plans can also include a maximum limit on your out-of-pocket medical expenses, including the deductible.
High-Deductible Health Insurance may also provide preventive care without a deductible, or with a deductible that is less than the minimum annual deductible for other products or services. Preventive care benefits can include annual exams, immunizations, prenatal and well child care, stop-smoking programs, and weight-loss programs.