The Benefits of an HSA

Today’s health care environment has created the need for creativity in procuring an affordable and effective health insurance plan.  Although it has been around for quite a few years, a Health Savings Account (HSA) has become quite popular lately, especially as a result of the premium increases that have taken place since the onset of Obamacare.

Simply stated, a HSA provides triple tax benefits, rewarding the consumer who takes an active role in managing health care expenses through the use of a High Deductible Health Plan (HDHP).  The benefit allows one to deposit pre-tax money into a savings account.  The money grows tax free and can be invested by the person who owns the account (Some investment limitations apply) and the money can be withdrawn from the account tax free as long as it is used for a qualified medical purpose.  Therefore, the money is never taxed.

A HDHP provides preventative services with no cost sharing, allowing one to obtain annual physicals and certain routine tests on a regular (Recommended) schedule.  However, most HDHPs do not provide a prescription drug card and rarely include office visit co-pays, which reduce the typical office visit charges to a fixed fee.   Thus, the HDHP encourages the member to “Shop” for the most effective value when seeking care.  Value is a combination of competence and fair (Transparent) pricing.

Why choose a HSA?  Saving money on monthly premiums is the number one reason; however, the ability to save money tax free and accumulate dollars for health care in retirement is also very popular.  One does not have to use the money for health care until necessary.  Therefore, if you have a routine expense that is not significant, you can pay for the service with after-tax dollars and allow your HSA account to continue to grow tax free for use later on.  There are penalties for withdrawing funds for non-qualified medical purposes, so the money should be earmarked for medical purposes.

Following are the limits associated with a HSA:

So for the person who is willing to ask questions about how much a procedure costs and is willing to shop for the best value, (and is protected from major losses-Notice the Out-of Pocket limits above), the HSA is becoming a very popular way to save money on monthly health insurance premiums while enhancing one’s ability to save.  And one thing is for sure, as we age, the propensity for spending on health care expenses goes up.  Why not consider a tax free approach to preparing and begin to shop for health care like you shop for everything else?

About Hipskind Seyfarth Risk Solutions

Hipskind Seyfarth Risk Solutions offers a wide-range of insurance products for individuals and businesses of all sizes. HS Risk Solutions, located in Chicago, provides expertise in the area of health and ancillary benefits and property and casualty insurance for businesses and individuals. For more information, visit HS Risk Solutions website at www.hsrisksolutions.com or on Facebook atwww.facebook.com/HSRiskSolutions.