The Beauty of the Health Savings Account
Most discussions regarding health insurance are based on issues like group versus individual plans and the type of insurance you buy whether it be HMO, PPO or what have you.
Health savings accounts don't get much mention, but they really should.
Why? They constitute a unique approach to health insurance, but one that works for many people.
Ask yourself a simple question.
Why do you have health insurance? People tend to look at the question from two perspectives.
The first group wants coverage for everything and is willing to pay for it.
The second group just wants coverage in case something dramatic happens and huge medical bills are incurred.
A health savings account is going to be of particular interest for this second group.
A health savings account often goes by the abbreviation "HSA", but is more often called a health IRA in the financial industry.
This is because the program works much like an IRA.
When you set up an account, you buy what is known as a high deductible health insurance policy.
This deductible is often $1,000 and means that you must pay the firs $1,000 in medical bills incurred before the insurance kicks in.
In exchange, the premiums charged for the insurance are much lower since the insurance company does not have to pay for the little charges most people incur.
Now things get really good.
You are allowed to contribute a certain amount of money each year to the account to ostensibly cover the deductible amount and cost of insurance.
In 2010, this amount is $3,050 for individuals and $6,150 for families.
The contribution can either be made with pre-tax dollars through your employer or you can take a tax deduction if you do pay with post-tax dollars.
The money is then used to pay the bills.
Anything you have left over at the end of the year rolls forward to the next year.
Slowly, but surely, the balance grows as you invest it over time.
When you retire, the balance can be withdrawn just like an IRA.
In short, you can pay for your health insurance, get a deduction and save money for retirement.
If that doesn't sound good, nothing will.
If you are frustrated with your health insurance situation, you should give health savings accounts a look.
Most people are pretty happy with what the program has to offer.
Health savings accounts don't get much mention, but they really should.
Why? They constitute a unique approach to health insurance, but one that works for many people.
Ask yourself a simple question.
Why do you have health insurance? People tend to look at the question from two perspectives.
The first group wants coverage for everything and is willing to pay for it.
The second group just wants coverage in case something dramatic happens and huge medical bills are incurred.
A health savings account is going to be of particular interest for this second group.
A health savings account often goes by the abbreviation "HSA", but is more often called a health IRA in the financial industry.
This is because the program works much like an IRA.
When you set up an account, you buy what is known as a high deductible health insurance policy.
This deductible is often $1,000 and means that you must pay the firs $1,000 in medical bills incurred before the insurance kicks in.
In exchange, the premiums charged for the insurance are much lower since the insurance company does not have to pay for the little charges most people incur.
Now things get really good.
You are allowed to contribute a certain amount of money each year to the account to ostensibly cover the deductible amount and cost of insurance.
In 2010, this amount is $3,050 for individuals and $6,150 for families.
The contribution can either be made with pre-tax dollars through your employer or you can take a tax deduction if you do pay with post-tax dollars.
The money is then used to pay the bills.
Anything you have left over at the end of the year rolls forward to the next year.
Slowly, but surely, the balance grows as you invest it over time.
When you retire, the balance can be withdrawn just like an IRA.
In short, you can pay for your health insurance, get a deduction and save money for retirement.
If that doesn't sound good, nothing will.
If you are frustrated with your health insurance situation, you should give health savings accounts a look.
Most people are pretty happy with what the program has to offer.
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