Is a Health Savings Account Necessary?
What is A Health Savings Account?
HSAs or Health Savings Account is similar to a personal savings account. But the money in Health Savings Account can only be spent on health care expenses. No one other than you are in control of your Health Savings Account. Not even your insurance company or your employer can own or control the money that is deposited in your Health Savings Account. An advantage of the Health Care Savings account is that the money that is being deposited in the account is not taxed. A special type of health insurance, known as a high-deductible plan is necessary for qualifying for a Health Savings Accounts.
Both high-deductible health plans and Health Savings Accounts were both created to keep healthcare expenses in check. It is backed by the idea that if people are using their own money for health care expenses, the money will be spent more wisely.
Health Care Expenses
Health Savings Account has advantages and disadvantages like any other health plan that is made available for people. While deciding if a Health Savings Account is necessary for you, you should be considering several factors such as your current budget and the type of healthcare that you will probably need for the upcoming years.
Health Savings Accounts are suggested if you are generally healthy and are thinking of saving for your future health care expenses. People nearing their retirement age can also choose for a Health Savings Account, to cover their expenses for medical care after retirement.
The Potential Advantages of a Health Savings Accounts
- You are in control of the amount of money that is to be allocated for your health care expenses.
- You are also in control of the amount of money that is being spent from your Health Savings Account. However, you can choose the health care that is suitable for you based on cost and quality.
- Your employer cannot control your Health Savings Account even if they contribute to your account. If you decide to switch your career, the money in your Health Savings Account is still yours.
- You are not obliged to pay taxes to the money that goes into your Health Savings Account.
- Some of the Health Savings Accounts also pay interest for unused deposits in your account.
- You can also choose to invest the money in your health savings account in mutual funds or other similar financial products. You do not have to pay taxes for any of the earnings from these investments.
Some Potential Disadvantages of a Health Savings Accounts
- It can be difficult to decide upon the amount of money that is to be allocated on your Health Savings Account.
- Some people may be tempted to skip seeking medical care to save for Health Savings Account.
- You will have to pay taxes for the money that you withdraw from your Health Savings account for spending on non-medical expenses.
- Many often find it difficult to allocate money for their Health Savings Account.
You have to decide whether to create a Health Savings Account by weighing the factors discussed above. You will have to also take note of several personal factors such as financial stability, income, and general health level.
