You have options when it comes to managing your health insurance. Many services are offered free of charge. An HSA or health savings account is not insurance but can be a viable option for covering health costs.
What is an HSA?
An HSA is a personal savings account for specified healthcare costs. The account allows you to set aside funds and withdraw from the account without paying taxes when the funds are used for medical expenses. An HSA complements your health insurance by covering the cost of copayments and deductibles.
What Does an HSA Cover?
You can use money from your HSA to cover:
- Prescriptions and over-the-counter medicines
- Eyeglasses and vision care
- Dental care
- Chiropractic care
- Acupuncture
- Lab tests
- X-rays
- Feminine hygiene products
- First-aid supplies
- Out-of-pocket costs to meet insurance deductibles
What Tax Benefits Does an HSA Offer?
There are three main ways an HSA can offer tax benefits:
- Contributions: Money you place in an HSA can be claimed as a deductible on your tax return.
- Growth: Money contributed to your HSA can earn interest.
- Withdrawals: You do not have to pay tax on funds you use to pay for qualifying expenses.
Is An HSA Available to Individuals with All Types of Insurance?
No. An HSA is only available to individuals with High-Deductible Health Plans (HDHPs). An HDHP is a type of health insurance that offers lower monthly premiums in exchange for a higher deductible.
HDHPs are typically a good option for those who expect few medical expenses, are generally healthy, and want to save on monthly premiums. If you have a lot of medical costs, an HDHP may not be the best choice.
Where Can I Sign Up For an HSA?
Health savings accounts are available through:
- Banks
- Credit Unions
- Investment firms
- Your employer
Before opening an HSA, you must enroll in an HDHP. If you have questions about whether your insurance qualifies as an HDHP, our health insurance agents can help. Call today.
When Might an HSA Not Be Right for Me?
While an HSA can offer tax advantages, it may not be for everyone. You may not want to open an HSA if:
- You expect to have a lot of medical expenses.
- You prefer a lower deductible health plan.
- You have other financial priorities.
- You plan to enroll in Medicare soon.
After enrolling in Medicare, you can no longer contribute to an HSA.
Your HSA Is Yours to Keep
Unlike health insurance plans, which do not provide coverage after you cease premium payments, a health savings account is always yours to keep. Like a personal bank account, the contributions to your HSA will remain with you even if you change your insurance, switch employers, or stop making contributions. They can always be used later to cover your medical needs, including after you retire or enroll in Medicare.
Protect Your Health and Future with the Right Plan
Whether you are considering opening an HSA or not, enrolling in a health plan that suits your needs is vital. Contact our firm today to schedule an appointment with one of our knowledgeable health insurance agents. Let us help set you on the path to a healthier future.