For many of us, open enrollment is fast approaching and it is time to make some decisions regarding your healthcare plan. First, does your employer offer a high-deductible option? If so, you should check out a health savings account (HSA). HSAs are like personal savings accounts, but only better. Here’s why:
- You control your HSA – not your employer or insurance company.
- Your employer may contribute to your HSA, but you own the account and the money is yours even if you change jobs.
- If your employer does contribute to your HSA it is a cash bonus without any tax implications.
- You don’t pay any taxes on money going into your HSA.
- There are no requirements to spend the money within a certain time.
- Some HSAs pay interest and some offer investing opportunities. All earnings are also tax-free
- You decide how much money to set aside for health care costs.
Now you know all of the good points about a HSA, but like all things there are some things that might not be so good for you. So, consider:
- The money in the account can only be used for health care. However, this includes things like vitamins, orthotics, glasses and copayments, just to name a few.
- The HSA account is only available if you have a high-deductible health plan. This means that your insurance will only pay for health care expenses after you’ve paid your deductible. While the deductible is high the premiums (the regular fee you pay to obtain coverage) is typically lower than traditional plans.
- Review your HSA plan before you sign up because not all HSAs are the same. If you have questions, ask your human resource representative.
All that being said, the HSA can be a great way to reduce your health care premiums, establish an automatic savings account and reduce your taxes. Check it out.