Health Savings Accounts

Aware of the ever growing cost of health insurance and the looming health care crisis, the US government, in January of 2004, launched an new and innovative health insurance plan called a Health Savings Account (HSA).

An HSA is a tax favored, tax exempt, tax deductible savings account which a consumer can use to pay for qualified medical expenses.

Health Savings Accounts work in conjunction with a high deductible health insurance plan and a special tax-free, interest baring savings account which is used exclusively for the payment of medically related expenses, such as prescriptions and doctor visits, including things not normally considered “medical expenses”, such as vision care, dental care and even many over-the-counter drugs.

The advantages of an HSA go beyond the obvious tax advantages. By purchasing a high deductible medical plan, your premiums are substantially reduced. You assume responsibility for the small things, like physician visits and prescriptions and the insurance company, which is still fully liable to any major expenses that may arise, rewards you in kind for the reduction of its minor responsibilities.

Basically you pay yourself, you insure yourself for minor expenses and earn interest on the payments. You pay an insurance company to cover you for any catastrophic events. This system makes both your exposure and your premium minimal.

Two more things to consider:

As in all high deductible plans, after you meet your deductible, all medical expenses are covered by the insurance company.

Unlike other high deductible plans, where two or three people need to meet their deductible before the insurance company assumes full responsibility, in an HSA, only one deductible needs to be exhausted before the entire family deductible is considered met and the company assumes 100% responsibility.

Health Savings Accounts alone will not solve America's health care crisis, but has certainly taken a bite out of it and for many has removed much of the sting.

Call us and let us help you decide whether an HSA, or a more traditional plan will best meet your needs.