HSAs, Not the Solution, But Part of It
Increasingly, individuals and families are considering health insurance policies with higher deductibles than traditional policies. Sometimes, employers are asking their employees to enroll in these plans, either as an option or the only health insurance plan available to employees. Individuals and families purchasing health insurance on their own can sometimes only find affordable health insurance if they choose a policy with a high deductible.
Some, but not all, of the newer health insurance policies with high deductibles may qualify individuals and families for a new type of trust or custodial account that has certain tax advantages, called a “Health Savings Account” or “HSA.” An HSA offers a way to put aside money to pay for your routine medical expenses and help you save money on taxes. HSAs are designed to fill in the gaps for “catastrophic” insurance policies that cover larger medical bills.
Most of us know that we can lower or premiums on our auto or homeowners insurance by raising our policy deductible. But few of us actually put the savings into a “rainy day” fund in case we actually have to pay our deductible when we have a claim. HSAs offer a way of putting money into that “rainy day” fund for health care. The tax benefits that come with the HSA make the opportunity that much better.
Health Savings Accounts do not solve all of the problems with obtaining health insurance. However, for many individuals and families, HSAs can make health insurance more affordable while providing an alternative way of financing their medical coverage.
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