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Health Savings Account Administration
The Health Savings Account Debate
By Wiley Long
When it comes to health issues you can't help but encounter a wide
range of differing opinions, especially on the topic of health
insurance and the rising cost of healthcare. It's no wonder - every
year the average American spends thousands of dollars on healthcare
related expenses. These expenses include the cost of monthly
insurance premiums as well as any out-of-pocket bills not covered by
insurance.
In particular, the recent introduction of Health Savings Accounts
to the public, and their enthusiastic promotion by the Bush
administration, has spawned an interesting debate between supporters
and critics of HSAs. A contentious new topic of discussion, the
hullabaloo surrounding Health Savings Accounts shows that Americans
do have strong opinions when it comes to their health.
It seems many people are interested in learning more about what a
Health Savings Account can do for them. Is it a good option for you?
Should the everyday American be concerned about access to healthcare
if HSAs grow in popularity?
Many detractors of this new healthcare option warn that only
young, healthy, financially stable people with good jobs benefit
from HSAs because they are the only ones who can afford it. Health
Savings Accounts must be opened in conjunction with a high
deductible insurance plan, either through your employer or through
the insurance company of your choice. The argument is that the
average person can't afford to deposit the minimum annual amount
required for a Health Savings Account and pay a higher deductible.
But in reality, the amount you invest in a Health Savings Account
can be deducted from your annual income tax calculations. In
addition, once you deposit that money into a Health Savings Account
it is left to grow tax free, safe from the taxman even when you make
a withdrawal. This perk is not a tax haven created solely for the
rich but can benefit anyone for whom lower taxes mean more money in
the bank. And the annual deposit you make into the account can be as
high as your insurance deductible - you are free to use the amount
deposited for that year's deductible payment as well, after which
point the insurance kicks in and covers any added expenses you may
accumulate for the rest of the year.
Although being made to purchase high deductible insurance
coverage may seem more expensive at first, you will save thousands
of dollars over time due to the low monthly premiums that inevitably
come with this type of insurance plan. The money you invest in a
Health Savings Account is not static either - interest is calculated
on the deposit, stretching your money and making it work for you.
You are also free to invest the money to make it grow, but of
course, this option does involve some risk.
On top of all this, you are allowed to use the money in your HSA
for a wide range of medical expenses. Normally insurance policies
only cover certain medical bills and health items, but HSAs allow
you the flexibility to pay for preventive care, such as dental
checkups and other medical appointments, as well as prescriptions,
contact lenses and other such necessities that are usually funded
out-of-pocket. If you don't use all the money in your account
throughout the year the amount rolls over to the next calendar year
and will continue to earn you interest.
While Health Savings Accounts may not be suitable for everyone,
many Americans can save a lot of money on healthcare by switching to
such a plan, and should regard the advent of this new choice with
interest rather than apprehension.
Health Savings Accounts and the Future of Healthcare
Some warn that the growing use of Health Savings Accounts could
potentially lead to the loss of employer-sponsored health insurance
altogether. The worry is that everyone will be left to fend for
themselves in order to cover healthcare expenses and most people
won't be able to foot the bill. But this is not likely to occur. As
of now HSAs must be used along with an insurance plan, and most
people deciding to switch have been offered the choice by their
employers. As insurance rates continue to rise, more companies are
drawn to HSAs because they save money through this type of coverage
as well. But company-sponsored health insurance is not in danger of
disappearing. Even with Health Savings Accounts becoming more
popular, the easiest and most efficient way to administer even this
kind of insurance package is through the employer.
Overall, hopes are high that Health Savings Accounts will make
the healthcare system as a whole more accessible and affordable. As
the individual takes on greater responsibility for the cost of
healthcare, prices should remain low rather than rise at an
exponential rate. From the most optimistic viewpoint, patients
paying medical bills and seeing the real price of their medical care
will fuel healthy competition amongst doctors and hospitals and
ensure that quality healthcare is provided for a reasonable price.
And as Health Savings Account holders reach the age of retirement,
the unused savings accumulated over the years can be withdrawn and
used for anything they need, whether or not it is a healthcare
expense. In the future, more and more self-employed people will most
likely flock toward this type of savings account in order to reap
the benefits that come with consistent access to healthcare
coverage. More flexibility and choice are also factors that will
likely contribute to HSAs growing in popularity.
Of course, HSAs are not a panacea for all the problems that
plague the current healthcare system, but their continued usage has
the potential to foster greater accountability within the medical
field. Healthcare issues are complex and cannot be governed solely
by the institution of a single healthcare scheme, but even the
smallest change for the better can make a big difference in the
lives of individual Americans and their families.
About the Author
This article was written by Wiley Long, President of HSA for
America
http://www.health--savings--accounts.com/. HSA for America is
committed to making it easy for people to learn about and set up a
health savings account that best meets their needs at the lowest
premiums available. Whether you have questions about which health
insurance company to choose or what administrators offer the best
options for your investments.
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