Can Health Savings Accounts (HSA) Save You Money?

by The Smarter Wallet on December 3, 2010

Want to save money on health costs? You can try discount health plans, but you can also look into a health savings account.

Many people do not have health insurance due to the rising cost for companies to provide this particular benefit. In addition, job loss can push many to the point of having no coverage when it comes to their health. If you do not currently have health insurance, you may want to consider getting a Health Savings Account (HSA). An HSA is a savings account that you use to pay for health or medical expenses that works alongside a high deductible insurance policy.

Can Health Savings Accounts Save You Money?

Most HSA accounts are typically lower in cost than a regular health insurance policy. This is due to the fact that you have a higher deductible on your insurance policy. The deductible is the amount that you pay out of pocket for medical procedures prior to the insurance kicking in and paying for medical expenses. Due to the fact that you are paying more out of pocket and taking on more risks, your premiums for this type of health coverage are much lower. If you decide to open a Health Savings Account, then in addition to paying monthly premiums to your insurance provider, you’ll also be depositing money into your HSA. You can then use the money here to pay for your out of pocket costs.

What Are The Benefits?

A Health Savings Account allows you to have more choices when it comes to your medical care. You also receive tax benefits from having an HSA. The money that you put into the Health Savings Account is not taxable. This means that you do not pay taxes on the income that goes into the HSA. At the end of the year when you complete your tax return, you will definitely see some of these benefits. The maximum amounts allowed in 2010 are $3,050 for an individual and $6,150 for a family.

What Can I Pay For With An HSA?

An HSA can be used to pay for your medical expenses at the doctor’s office or hospital, as well as your eye exams, eyeglasses, contacts, prescription drugs, dental procedures (non-cosmetic), laser eye surgery, and many more health related costs. For a complete list of qualified medical expenses for an HSA, click here. The key point here is this: much of your money on a yearly basis goes to these items anyway. So, why not make the tax system work in your favor with an HSA?

Who Is Eligible For An HSA?

You are eligible for an HSA if you are covered by an HSA qualified High Deductible Health Plan (HDHP). You also cannot be covered by any other health insurance plan that is not an HDHP. You can have automobile, dental, vision, disability and long-term care insurance and still have an HSA. Therefore, if you are unemployed, you still need to get coverage under an HSA qualified High Deductible Plan before opening a Health Savings Account.

Where Can I Get An HDHP So I Can Qualify For An HSA?

Most health insurance companies provide HSA options with their other insurance packages. Just search online to find eligible companies. Some of the biggest ones are Blue Cross Blue Shield, Aetna, and Cigna. You can also check comparison sites such as the following, to find and compare policies:

  • eHealthInsurance: Offers Individual & Family plans, Small Business plans, Short Term Insurance and Medicare Options.
  • InsureMe Health Insurance: Get health insurance quotes from StateFarm, Farmers’, Kaiser Permanente, etc.
  • USInsuranceOnline.com: Get free health insurance quotes.
  • NetQuote: The smartest way to save on insurance.
  • 2Insure4Less.com: Save 50% or more on health insurance.

There are many options out there when it comes to choosing an HSA.

The world of health insurance coverage can be tricky and confusing. However, with this type of plan, you are at least covered for major medical expenses. In the long run, it is far better to have some type of coverage rather than none at all. Research your options and find out if an HSA is right for you.

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