Learn Why Health Savings Accounts are Gaining in Popularity
We all know that health insurance coverage is essential in today’s world, but many of us have trouble finding a plan that provides both affordable premiums and quality coverage. The best health insurance coverage in the world is completely worthless if it is unaffordable, and more and more workers and retirees have been looking around for an alternative to traditional health insurance coverage.
Many of those individuals have found the coverage and flexibility they seek in a health savings account, also known as an HSA. A health savings account provides a pool of money that can be used to pay for a wide range of health related expenses, from doctor visits and prescription drugs to over the counter medications and chiropractic care. These types of plans have a number of important advantages, including the ability to put money aside each pay period, a way to save on taxes and the ability to roll the available funds over from year to year.
A health savings account is designed to work with a high deductible health plan, or HDHP. In fact a high deductible health plan is needed in order to open an HSA, and these two tools can work together to keep health care costs under control and avoid catastrophic expenses.
A high deductible health plan is different from a traditional health insurance plan – most notably in the fact that the insured is typically responsible for the first couple of thousand in health care expenses. By pairing that high deductible plan with a health savings account, workers can use their HSA funds to pay those deductible costs as needed. Since the premiums on a high deductible health plan are typically quite a bit lower than those for a traditional plan, workers can save significant amounts of money. And since the money dedicated to a health savings account comes from pre-tax funds, those workers can lower their tax liability and save even more money.
With the costs of traditional health insurance coverage rising higher every single year it is easy to see why so many workers are choosing to enroll in health savings accounts. Compared to traditional fee for service, PPO and HMO health insurance plans, the premiums for high deductible health insurance plans can be quite affordable. More and more companies have begun to offer these types of high deductible health insurance plans, since it helps keep both their costs and the costs for their workers under control. By combining the lower premiums of a high deductible health insurance plan with a health savings account workers of all ages can enjoy substantial savings while taking control of their own health. Since those workers are responsible for a significant portion of their health insurance costs, they are more likely to shop around for the best prices on the services they need, and this helps keep health coverage costs low for everyone. The ability to control costs and make the most of available funds are just two of the reasons health savings accounts have become such a popular choice.