Winning with a Health Savings Account (HSA)
If you pay for your own health insurance, it could be prudent to consider a High Deductible Health Plan (HDHP) in conjunction with a Federally Qualified Health Savings Account (HSA).
Here's why:
Many traditional health plans simply cost more than they are worth. Laden with benefit rich features many people never use, traditional plans can be replaced with a simple major medical policy saving the insured from 25%-50% every month on their fixed insurance cost (premium).
If you take that premium savings and simply "pay yourself" the same amount each month using a Tax Favored HSA account, you will have the available cash for the routine healthcare costs incurred over a typical year with money to spare.
The High Deductible Health Plan gives peace of mind for major medical expenses, you pay cash for minor medical expenses using your HSA.
Using your HSA can be easy as well with a VISA debit card or a traditional checkbook to simply pay for healthcare costs as you would using any other check or debit card.
When seeing your doctor or healthcare professional use your insurance card at the point of service like you would with any other plan. Whatever the plan does not cover due to the high deductible, pay for out of your HSA account.
Here is where it gets real smart...
When using your HSA to cover any eligible healthcare cost, you are paying with a "short dollar" or tax free dollar.
A family depositing $5,000 annually into their HSA account would realize a tax savings of $1,000 if they were in a 20% tax bracket. Many would save more. Add that to saving 25%-50% every month on your old health policy and now you are taking control of your healthcare costs wisely.
Money deposited into an HSA is tax deductible, earns tax free interest and can be withdrawn at any time for eligible medical expenses with no tax burden at all. No wonder Paul Zane Pilzer recommends fully funding an HSA before your IRA or 401k.
Finally, at age 65 you can use the HSA account accumulation for personal retirement purposes with no penalty, subject only to income taxation.
In a time when many are frustrated or bewildered by the rising cost of health insurance, learning how an HSA plan would benefit you could be one of the smartest decisions you ever made.
Tom Yakopin is President of Benefit Marketing Group Inc.; a Managing General Agency representing top life & health insurance companies in over 25 states through a network of over 250 agents. He serves the insurance industry through recruiting, training and managing some of the top health professionals in the US.
Visit their website at http://www.savepremium.com
Return from Health Savings Account to Asset Management
Related Articles:
- HSA Offers Tax Deduction and Greater Control over Your Healthcare Dollars
- Long Term Care Deductibility Levels
