Post a new topic
    1 Reply Latest reply on Nov 23, 2008 5:10 AM by snipperred

    Health Savings Accounts

    drbaako Newbie

      A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit. Unlike a Flexible spending account (FSA), funds roll over and accumulate year over year if not spent. HSAs are owned by the individual, which differentiates them from the company-owned Health Reimbursement Arrangement (HRA) that is an alternate tax-deductible source of funds paired with HDHPs. Funds may be used to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses are treated very similarly to those in an IRA account in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier. These accounts are a component of consumer driven health care
        • Re: Health Savings Accounts
          snipperred Scout
          Nice information.

          HSA's are generally less expensive for employers to provide too. However, the reality is these plans pass over the out of pocket liability to those insured. If you are terrific at managing your finances and healthcare, then this can be an excellent choice. However, if you are not positioned to pay your medical expenses when they arise, you could find yourself in an uncompromising position. Physicians are noticing their "bad debt" rise as a result of accepting HSA (essentially self-pay in a lot of ways). Since even national media advise payment to physicians last, an intelligent response from healthcare providers is to require payment at the time of service, credit card authorizations on file, or to terminate patients upon non or late payment much faster than in the past. Also, if you are older and/or have expected high utilization for medical services, the more expensive HMO or PPO may be better coverage plans for your needs and cash flow. I still think HSA's are great as long as you actually save enough money to meet your deductable. You might consider timing your periodic visits earlier in the year to knock out that responsibility before flu season or unscheduled health needs arise. Even better if you can get your employer to make contributions directly to your account in addition to the reduced cost employee health plans. Finally, be careful to understand your personal tax implications. The exemptions can vary and change from year to year. You might need to hit 10K in verifiable health expenses before you qualify for a tax exemption for example. Or the person doing your taxes might be unfamiliar with HSA tax accounting. What payroll tax savings you are to enjoy, will be in your withholdings and that employer's contributions to your account. Be careful not to get the short end of the stick with your HSA. Employers are incentivised to save on their own payroll liabilities too. At the end of the day, you really need to understand your finances, insurance, and healthcare when it comes to HSA's. That is a new dynamic most people are not used to and not being advised of when they change to these plans. However, you might be surprised to learn just how many doctors view HSA's as plans of choice for themselves.

          Best,

          Anthony