Health savings accounts are becoming more popular, but what are these accounts, and how do they affect the cost of health insurance premiums? A health savings account is a medical savings account available to American consumers which offers some benefits over the traditional health insurance plans, but there may be certain disadvantages as well. These accounts are used along with a high deductible health plan. A specific amount is taken out of your paycheck each pay period, before taxes are calculated, and deposited in the health savings account. This gives you tax advantages and lowers the premiums for the health insurance substantially. By choosing a health savings account you can lower your health insurance premiums by up to ninety percent. The money deposited in the health savings account can be used to pay medical bills and expenses at any time with no tax penalties. The money in the account may be withdrawn for specific purposes other than medical bills, similar to an individual retirement account, but there can be high tax penalties if the money in the account is used for purposes other than medical expenses.
There are statutory limits placed on your contributions to the health savings account, and Congress is the one who sets these limits. For the year 2008, the limit for an individual health savings account is twenty nine hundred dollars, and the family limit is five thousand eight hundred dollars. This amount is also usually what the deductible is under a high deductible health insurance plan, which is the amount you must pay out of pocket, or out of the health savings account, before the health insurance policy will pay for medical expenses. Any money that is deposited to the account will roll over to the next year if it is not used or withdrawn during the current year, so there is no chance of your deposits being lost or forfeited. For account holders who are fifty five years old or older are allowed additional deposits to catch up. The health savings account belongs to the policyholder, not the employer or the health insurance company, even if the employer deposits funds into the account. If the health insurance policy is canceled or terminated, the account holder can not deposit any additional funds, but the balance in the account will be available for use until the account balance is depleted.
With health savings accounts, along with high deductible health insurance plans, the consumer takes more responsibility for their health care and the related costs. Because you have such a high deductible, you will save a large amount on monthly health insurance premiums. For consumers who do not need regular doctor visits or a number of maintenance medications due to an existing medical condition, health savings accounts and high deductible health plans may be the best way to get tremendous savings on your health insurance costs. These plans are not ideal for someone with medical conditions which are permanent or require expensive treatment and medications though, because of the very high deductible. With the cost of health insurance premiums rising all the time, this health insurance option can save you thousands of dollars on your health insurance costs.
