Go the Health-y Saving Account way

Go the Health-y Saving Account way - By: Andrew Warren Andrew Warren, Posted on: 2008-08-08

Go the Health-y Saving Account way

The costs of medical care are sky-high and health saving account (HSA) is an absolute necessity nowadays. HSA was introduced by Medicare in 2003 to help people save money that are tax-exempt for future health and medical expenses. A lot of people in California are looking into this as the impact of high cost of living and health hazards are slowly realized and change and their perspective in finances.

HSA works as an alternative for traditional health insurance. One can deposit their money into a tax-free account and use it to pay for their current and future medical expenses. There are two ways to make a contribution: an individual can make their own tax-deductible contribution or their employer can make a tax-free contribution to their account.

Any amount contributed to a health saving account belongs to the holder and not to the employer. That means that even if you are no longer employed by the same employer, any contribution that they have made on your part is yours to use.

Like an IRA, the money in your HSA can grow through investments like stocks, mutual fund, certificates of deposit and bonds. You have a control over your money and you can decide which type of investment you want to invest in. This is unique to HSA only, as other regular health insurances make all the decision and investing for you.

HSA works best with HDHP (high deductible health plan), also called “catastrophic” health plan. Your HDHP is less expensive than regular medical insurance because it generally does not cover your minor health expenses. You can only use it for major health expenses that normally cost you thousands of dollars. For minor injuries, you can use your funds in your health saving account.

To take advantage of HSA, one must have a HDHP minimum deductible of $1050 for individual coverage and $2100 for family coverage. Getting an account will not cost you anything and you can open to any approved bank, insurance company or any credit union.

HSA contributions should not be more than your HDHP, if you have a deductible HDHP of $2000, then your total deposit for your HSA in a year should not go over that amount. However, individuals aged 55 and above are allowed to pay catch-ups until they can sign-up for their Medicare.

When making contributions, you can deposit funds regularly or you can choose to deposit the money in lump sum. Some banks, insurance company and credit union do require a minimum contribution and balance requirement. So, before you open an account, make sure that you understand all their requirements and terms of contribution to avoid problems in technicalities. Choose an institution that can give you the best deal – low contribution requirement and no maintaining balance to not feel pressed about your HSA deposits.

Health saving accounts may seem intimidating at first, but the savings you get from tax-free expenses are just amazing. Medical insurance is essential, especially if you have a family to take care of -- HSA makes it possible for you to take care of them and also take care of your finances.

Article Source:- Directory Submission & Sexy Deepika Padukone

Andrew Warren is author of this article on California Health Insurance . Find more information about California Health Plan here.

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