Health Savings Accounts: The Advantages
To combat the problem of rising insurance premiums, the government signed into legislation the creation of Health Savings Accounts. These are designed to offset the costs to both employers and employees. If used and set up properly, a health savings account can create many advantages.
One advantage that health savings accounts help to create is the increased buying of high deductible health plans. When one pays a higher deductible, the insurance rates go down. One
can possibly afford a higher deductible with the help of the Health Savings account.
The health savings account also allows people to start saving for their future in terms of health. By creating this account, you can have better financial control over your potential future medical expenses.
HSA’s are also open to any type of employer. Previously, the medical savings accounts were only open to those places that employed less than 50 people. The health savings accounts are
open to any employer regardless of size. With the vast majority of American relying on employers for their health insurance, this is a great leap forward.
A health Savings account is supposed to help the account holders become more discerning if their choice of health care providers. It is supposed to create a shop around mentality that will hopefully be reflected in lower insurance premiums for all.
Health Savings Accounts: Flexible Spending Accounts
When the government allowed for the creation of health savings accounts, they allowed for several types to be made. Each has its own advantages, and which one is best is up to the individual. One form of Health savings account is known as the flexible spending account.
It is easy to qualify for a flexible spending account and you don’t even need a current health policy. However, there are drawbacks. To set one up, an employee and employer decide an amount to be put into the flexible spending account. This money is to be used for the uninsured medical expenses. The money then sits in the account where it can accrue interest. The funds
are immediately available should you need them, even if the entire amount isn’t in the account, at the time.
The flexible spending account does decrease your earnings. However, the program is tax sheltered so your tax burden will also go down. If you need the funds for medical expenses, you simply submit your receipts and are reimbursed from your flexible spending account. This cuts down on long wait times from standard insurance companies.
Flexible spending accounts can be useful but as stated before there are some drawbacks. The funds are only good for one year. If the end of the year arrives and you haven’t used the money,
it cannot be carried over to the next year. They are also not transferable to other accounts. If you change employers, the policy stops.
Flexible spending accounts are just one way to take advantage of the health saving account schemes. They are cheaper, but they must be planned carefully.
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