What are Health Savings Accounts?

By hrlineup | 12.12.2019

Healthcare costs in the United States are increasing every year. In 2016 for instance; these costs had gone up to $3.3 trillion, making the healthcare sector one of the largest industries in the country. With the rising healthcare costs come several solutions that people are using to help manage these increasing costs and Health Savings Accounts are one of those.

Healthcare Savings Accounts, popularly known as HSAs are tax-advantaged accounts that are created for individuals who are covered under the high-deductible health plans (HDHPs). They are meant to provide a way to save on medical expenses that these HDHPs do not cover.

HSAs are slowly gaining in popularity and their growth is not expected to die any time soon. These types of accounts must be used with HDHPs so as to offer exceptional medical benefits for both employers and employees. In such accounts, contributions are made by individuals or by the individual’s employer.

These contributions are usually limited to a maximum amount every year. The contributions are thereafter used to cover qualified medical expenses which include medical care services like vision and dental care as well as over-the-counter drugs. To open such an account, you need to have a high deductible health plan in place. This can be a plan you have purchased on your own or one you have gotten through your employer.

What are the benefits employees get from HSAs?

Notably, there are several benefits of opening a HSA medical savings account:

  1. It is a chance to enjoy triple-tax advantages: contributions in these accounts are made prior to tax, which means that your savings and the interests you enjoy thereafter will be tax free. The withdrawals are tax free too.
  2. A medical health savings account allows for flexible contributions. You can change the amount of money you want to contribute at will, to accommodate your financial needs and lifestyle.
  3. This tax free health savings account is owned by the contributor. This means that even if you leave your current job, you will still be able to take your account with you.
  4. Your HAS will help you cover any out-of-pocket healthcare expenses even after your insurance deductible has been reached. You will no longer have to dig deeper into your pocket to pay for any medical expenses.
  5. HSAs allow users to roll over their funds from year to year, without losing their money. If you haven’t exhausted all your annual contributions, you can always carry them over for the following year.

Health savings account eligible plan is currently the most attractive medical savings plan that is offering incredible and attractive benefits to both workers and employers. If offered by the right benefits administrator, your account will come with useful online tools and assistance help to help you understand and manage your account better. In this age of rising healthcare costs, this is the kind of account everyone needs to be sure that their medical expenses will be well taken care of at all times.