| The health savings account is a relatively new | | | | the money saved can help add up to a better |
| tax-savings vehicle, but it's one that makes a whole lot | | | | accumulation of cash if and when it's really needed. |
| of sense. Learning to navigate this new option and | | | | * Easy to open. Most banks, credit unions, insurance |
| understanding its benefits really can help people save | | | | companies with high deductible plans and so on will |
| a ton of money when unexpected medical expenses | | | | help people set up their own health savings account |
| arrive. | | | | plans. The only requirement is the right kind of medical |
| Health savings account plans tend to come in two | | | | insurance policy. It should cost nothing to open one of |
| basic forms - employer sponsored and self-purchased. | | | | these plans. |
| Since the rules for employer-sponsored plans might | | | | * Easy to use. Most HSAs come with a debit type |
| differ from business to business, we'll focus in on ones | | | | card that can be used to pay for qualified medical |
| people who buy their own individual health insurance | | | | expenses. |
| policies might benefit from. | | | | These plans are a little tricky to understand as far as |
| In a nutshell, these savings plans allow people to save | | | | all the minute details of what is an allowable expense |
| money on a tax-free basis for qualified medial | | | | and what isn't. The federal government offers highly |
| expenses and future retirement medical expenses. To | | | | detailed information on qualified expenses, but there |
| qualify, people must be on High Deductible Health Plans, | | | | are some generalizations that can be made. The |
| which means they pay at least $1,000 in deductible for | | | | types of things typically included in the qualified list are: |
| self-only coverage. Most insurance companies will now | | | | * Insurance premiums. This is allowed for the payment |
| let customers know when a plan they choose makes | | | | of COBRA insurance and for those who are |
| this option available to them. | | | | unemployed. |
| The benefits of the health savings account are many. | | | | * Co-payments. Some times co-payment amounts can |
| They include: | | | | be charged to the health savings account. |
| * Money in a health savings account is owned by the | | | | * Prescription medications. These are generally |
| person who opens it. How to spend that money is | | | | considered eligible expenses as are over-the-counter |
| entirely up to the person, but if it goes on non-qualified | | | | medications and medical supplies. |
| medical expenses, the tax benefit will be lost. | | | | * Dental and vision care. In most cases, expenses |
| * The money "rolls over." Whereas some | | | | associated with non-cosmetic dental and vision care |
| employer-sponsored and supported health savings | | | | are considered fair game. |
| account set ups don't allow for roll over from year to | | | | A health savings account can be a great way to bank |
| year, a self-opened account does. The money put into | | | | up money to pay for medical expenses without having |
| the account is income tax-free unless it is used for | | | | to feel the bite of income tax. As long as the money |
| ineligible expenses. | | | | used in these accounts is spent on qualified medical |
| * Helps people save up for expenses faster. Since | | | | expenses, the savings extends after use, as well. |
| income tax won't come into play with these accounts, | | | | |