Health Savings Accounts are becoming more popular, but what are these accounts, and how do they affect the cost of health insurance premiums?
A health savings account is a medical savings account available to American consumers which has some benefits over the traditional health insurance plans, but there may be certain disadvantages as well. These accounts are used along with a high deductible health plan. The amount deposited in the Health Savings Account can be taken before taxes are calculated. This gives you tax advantages and can lower the premiums for the health insurance.
By choosing a health savings account, you can fund for future medical bills and expenses at with no tax penalties. The money in the account may be withdrawn for specific purposes other than medical bills, similar to an individual retirement account, but there can be high tax penalties if the money in the account is used for purposes other than medical expenses.
With health savings accounts, along with high deductible health insurance plans, the consumer takes more responsibility for their health care and the related costs. Understanding your high deductible plan and planning for the expenses associated with the deductible are the keys to success for consumers choosing this option. Many people report that their overall costs have been lowered and their savings increased as the result of participating in – and funding – a Health Savings Account.
With any insurance plan or concept, check with your Insurance Advisor before selecting a plan to make sure the plan meets your needs and is affordable. As the health insurance industry evolves under Health Care Reform, many changes will occur. When considering a plan, make sure you have the latest and most up-to-date information available. Also, as your Insurance Professional to explain to you if and how the policy you are considering could be effected by changes in the law.