When it comes to healthcare, there are a variety of options for you to choose from. Many individuals have found a practical option to be to opt for a high-deductible health plan that has a deductible of at least $1,200 for individuals, or $2,400 for families, and then open a health savings account to help them supplement these health plans. However, if you are unfamiliar with health savings accounts, you may be wondering how they are beneficial. To help you get a better understanding of health savings accounts, here is a quick overview of what they are, and the benefits they provide individuals with.
So What is a Health Savings Account?
A health savings account is a special type of personal savings account where you deposit money that will be solely used to pay for health care expenses. However, this type of account is not controlled by your health insurance company or your employer. While employers may choose to pay into their employee’s health savings accounts, you own and control all of the money within your HSA (health savings account). In order to be eligible to open a health savings account, you must have a high-deductible health insurance plan. The money in this account can then be used to help pay for any out-of-pocket health insurance costs you encounter throughout the year such as deductibles and copays. If you are interested in a health savings account, here are a few of the benefits opening one could provide you with.
One of the benefits of choosing a high-deductible health insurance plan and a health savings account rather than a costlier low-deductible plan is that this provides more flexibility, and savings, for healthy individuals. Many young people don’t find themselves at the doctor’s office very often, and thusly don’t like the idea of a health insurance plan with high monthly premiums. However, they may also be nervous about the high-deductibles cheaper plans have, and the thought of being left responsible for a deductible they can’t afford. A health savings plan could then be the perfect solution for these individuals. A high-deductible health plan will save them a great deal of money on a monthly basis by lowering their premium, and money they put aside into a health savings account can act as a security blanket should an emergency arise and they are suddenly faced with a high deductible and out-of-pocket expenses.
A great part about health savings accounts is that you can choose to place pre-tax income into this account, and save money without being taxed on it. You can choose how much money to save each month without having to worry about losing any of this savings to taxes. However, there is a cap each year on how much money you can place into a health savings account. In 2015, this cap was $3,350 for individuals, and $6,650 for families.
Money Rolls Over
Another great feature of health savings accounts is, unlike flexible savings accounts, you don’t lose the money in your HSA at the end of the year. Whatever you don’t use rolls over to the next year. This money you roll over each year can then accumulate and help you to pay for health insurance premiums when you are in between jobs. You can also use money you have saved in your HSA for living expenses after the age of 65, making health savings accounts another great way to save money toward your future.
Many people enjoy the benefits and flexibility that health savings accounts provide; however, we have only touched upon a few of these benefits here. Contact us to learn more about health savings accounts, as well as to find out about they ways in which one could benefit you and your family.