Getting A Grasp Of Health Savings Accounts

Health insurance can be an expensive proposition as you grow older. The government and insurance industry have thrashed around for years trying to find some way of dealing with this. There have been many supposed solutions produced, but the health savings account is one that works well and is worth your attention.

The health savings account is a recent creation. It came into existence in 2003 when it was signed into law by President Bush as part of a Medicare bill. The plan is a very unique approach to health insurance. The basic goal of the plan is to convert health care insurance from a cure all to a solution for only traumatic heath events.

The insured individual – you – buys what is known as a high deductible policy. The deductible may be $1,000 and up. This effectively means that you are personally responsible for paying the first $1,000 in medical bills during the year in question. After that, the insurance kicks in and pays most of the bills depending on the type of policy you buy. The effect is to slash the risk of the insurance company paying out money and your monthly premium as well. Should something major happen with your health, you are still covered. Many view this as a win-win policy.

There is a second advantage to the health savings account. You are allowed to save money every year to cover the deductible on a tax-free basis. This is why the health savings account is often referred to as a health insurance IRA. You can stuff money into it much like an IRA and let it accumulate. The money can then be used to pay the medical bills that accrue before the deductible is exhausted. Yes, you can have your cake and eat it to!

Is there any downside to the health savings account? Not that I can see. You are going to be able to save money tax free and still have health insurance should something major go wrong while slashing the cost of your policy. As long as you can cover the deductible, it is a great solution to your health care needs.

By: Mark Warner

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Mark P. Warner is with BestPlacetoBuyHealthInsurance.com - where you can find a California health care insurance quote starting as low as $49.