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HSA Health Insurance Plans Pros and Cons

By Marilyn Katz

Republish: EasyPublish™
Published: 06Nov2010
Word count: 536
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What is an H.S.A. health insurance plan? The letters, H.S.A., stand for Health Savings Account, and that particular type of savings account is just one part. There will be two key parts to this type of health plan.

One is a higher deductible major medical insurance policy. The other one is the actual savings account.

In theory, the medical plan will pay for large medical expenses that are covered as soon as the deductible is met. The account will provide funds to pay for many health expenses that are not covered or for covered expenses if the insured person has not yet reached the insurance policy deductible.

There are some key advantages to having an H.S.A., but these will not benefit everybody. First look at some of the benefits. Then it will be easier to decide if you should be an H.S.A., PPO, or HMO!

The contributions the savings account will not be taxed if they are within current IRS limits. This means that a family can put away pre-tax income to use for health expenses. This makes that money go further.

If the money does not get used in one year, it can keep rolling over to the next year. Hopefully, this gives a family or individual the opportunity to set aside enough money to help them with medical expenses. Some accounts even earn interest just like regular savings accounts.

In addition, the account may be used to pay for some health care costs that would not even be covered by major medical insurance. Some examples may be dental care, eyeglasses, or vitamins. You have to check with your plan and with current tax rules to see what types of purchases are allowed.

Because the actual H.S.A. health insurance policy has a higher deductible, it should be cheaper than a lower deductible policy too. Some insurers relax underwriting rules a bit for higher deducible insurance so there is also a chance that more people would be accepted. For those who are accepted, but may have some minor health conditions, there may be a better chance they will only have to pay standard rates.

By now, you may have figured out that some people can realize a big benefit from this type of plan. If you need an additional tax deduction, this is a great way to get it while saving for future health expenses. An H.S.A. also allows you to control your costs by paying less for major medical while saving for future expenses in a way that gives you tax advantages.

A health savings account can combine with a higher deductible major medical plan to benefit a disciplined saver who can benefit from tax deductions. Since savings roll over from year to year, unused money can grow. At retirement age, the money can be withdrawn with no penalty.

As mentioned before, these plans do not work out that well for everybody. The savings account only benefits good savers who actually deposit money. If a plan member never makes deposits, there will not be any cash in the account when bills need to get paid, and there will not be any tax deductions!

We can help you decide between HSA or PPO health insurance with our helpful articles and free health insurance quotes. If you needindividual health insurance, start your quotes here.

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