Understand The Benefits Of Health Savings Plans

Health savings plans, also known as HSAs or Health Savings Accounts, are savings accounts that can be used only for expenses related to health care. The money in a health savings account is not taxed, but if money is taken out of the account for non-medical needs, the money that is withdrawn is taxed. In addition, there is a 10% penalty on the withdrawn amount if the withdrawal was made by a person under the age of 65 for a non-medical expense. The money in the health savings account can be invested in stocks, bonds, or mutual funds if the owner desires.

In 2003, health savings accounts were first created to fill an increasing need for consumer directed health care and controlled health care costs. Anyone who has a high deductible health insurance plan is eligible to open a health savings account. Theoretically, health care costs are controlled with an HSA because not only is the consumer more careful about how the money is spent, but doctors can choose to lower their own rates in order to compete for the consumer's business.

Health savings plans are best suited for those who are younger and healthier. Those who might need expensive health care might not have the time to save up enough money to cover their healthcare costs. Younger and healthier people may be better able to save up enough money to cover their health care because any unused money stays in the account. This is in contrast to a Flexible Spending Account since in a FSA, unused money does not roll over to the next calendar year.

If you own a health care account you can decide how much money is set aside for your health care costs. If you are in good shape when it comes to your personal health, it can be an advantage since you will pay less money since a lot of that insurance will go unused. Those who are not quite as healthy might pay more since they will need insurance coverage more often, but for those who consider themselves in good shape and willing to take the chances, there is the risk of catastrophic injuries or serious illnesses that occur out of nowhere. Also, the IRS does put a cap on the amount that can be deposited. Recently, the limit has been $3000 for an individual or $6000 for a family.

According to the IRS regulations, money in an HSA can only be used to cover expenses related to office and hospital visits, medical testing, prescription medications, insulin, and medications that are over-the-counter but that have been prescribed to the patient. Unlike previous years, over-the-counter medication and medical products can no longer be purchased using HSA funds. This change went into effect in 2011.

By: Ethan C Kalvin

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The complicated subject of health insurance can be more easily learned about with research on the web. Look over Indiana Health Insurance and Florida health insurance online before buying.