Health savings accounts are just like personal savings accounts. The only difference is the fact that money that keep in your health savings account (HSA) is used to cater for your healthcare expenses. You are the one with full control over your HSA. Your employer or insurer does not have any control. To make yourself eligible to open this type of account, you should have a special type of health insurance commonly referred to as “a high-deductible plan”. These accounts were created to help to control people’s healthcare costs.
Is a health savings account right for you?
The health savings account have a lot of benefits. All the withdrawals that you going to make from your account to pay for medical expenses will not be taxed. This includes the money that you use for dental and vision treatments. You will also not pay tax if you use the interest earned to pay for medical expenses. Opening this type of account is a great move if you are healthy but you want to save for future medical expenses. However, if you think that you will need expensive medical care soon, the HSA will not be the best option for you.
Advantages of health savings accounts
- You have total control of how the money in your account will be spent.
- You decide how much money you are going to set aside.
- Your employer can make contributions but you will still own the account even if you decide to change jobs.
- The money going to your HSA will not be taxed.
- The money in the account rolls over to the next year if it’s not used.
Disadvantages of health savings accounts
- It is impossible to predict the future. This makes it difficult to budget for health care expenses.
- Pressure to put money in your HSA can prevent you from seeking medical help when you need it.