subject: Can You Profit From A Health Savings Account? [print this page] Can You Profit From A Health Savings Account?
When you are spending too much of your monthly budget for health insurance, there are several ways to find low-premium plans. The most obvious strategy is to raise the deductible on your health insurance, but how are you going to manage medical bills if you get hurt or sick until the deductible is met?If you're saving now and paying taxes on the interest your savings are earning, why not invest some of your savings in a tax-free account. That's one of the advantages of a health savings account (an HSA). You are only allowed to open an HSA with certain qualified high-deductible plans, rather than all plans that have large deductibles.In case your employer doesn't offer an HSA plan, you can decide which bank or other financial institution has the best HSA plans and start your own. Basically, the only requirements are that you're under age 65 and you purchase an HSA-qualified high-deductible health plan (HDHP). Your employer can help to build your HSA, but you'll retain control of the funds. You can even continue to use your HSA to fund health care after you retire.How Do Health Savings Accounts Compare To Co-payment Plans?When your health is good and you require few doctor appointments, co-pay plans may cost you more. A typical co-pay to see a doctor runs around $25 or $35. If you pay for an in-network doctor out of your own pocket, that may only run about $65. If you pay $25 a month to keep your co-pay at $25 to $35, you could have to visit the doctor eight times or more just to break even. Switching from a co-payment plan to a high-deductible HSA-plan can help you save while your health is good. High-deductible plans purchased after March 2010 pay for an annual checkup, vaccinations and several screenings to identify major problems, like cancer, whether you've met your deductible or not. Now that you can maintain recommended health care without a lot of out-of-pocket expense, high-deductible plans make more sense.Do Health Savings Accounts Work During Middle Age?Even people in their fifties, as long as their health is relatively good, can keep their health insurance premiums low by switching from traditional co-pay plans to HSA-qualified plans. That makes it possible to build up the balance in an HSA with the amount saved on monthly premiums. If you're paying a lot in income taxes, HSA Plans can also help you cut down on what you pay in taxes. Those savings can also be invested in your HSA. Most health care costs are considered tax deductible when paid for from an HSA. If your health insurance plan doesn't cover Ayurvedic medicine, dental services, eyeglasses, homeopathy, etc., you can still pay for these services from your HSA. You're allowed to take a tax deduction for all qualified health care expenses even if you don't itemize on your tax returns.If you expect to need a lot of expensive health care in the near future and don't have the savings to manage a high deductible, full-coverage plans are a safer bet. In addition, remember that you'll have less time to build up the balance in an HSA when you are close to retirement.HSA-eligible plans do come in a wide range of deductible options, so balance the amount of health care you're able to cover until the deductible is met with the savings available. Consider how much you can save in income taxes, with lower premiums and by earning tax-free interest.
