You have heard the benefits of health savings accounts, but is an HSA right for you? Will an HSA really make your life easier? Many may think an HSA is only beneficial if you are healthy. This simply is not the case. Americans from many walks of life and varying levels of health can save with an HSA. Here is a closer look at how an HSA can change the way you think about paying for healthcare.
#1: You visit your doctor regularly
All HSA-qualified health plans pay 100% of your annual exam and preventative screenings. You pay nothing for these services. Many preventive prescriptions are also covered at 100%.
#2: You frequently reach your deductible
Some people regularly use their health benefits and have little difficulty reaching their deductible. If you normally spend a significant amount of money on doctor visits, home care, physical therapy or other medical care, you need insurance to help pay for these costs. With any health plan, you have to pay out-of-pocket for these services until you reach the deductible. At the same time, you must also pay for your insurance premiums. However, with an HSA-qualified plan, your premiums are usually a lot lower. And the tax savings of HSAs represent an immediate discount for qualified expenses, including those that count toward your deductible.
#3: You are looking for tax savings
HSA contributions can be deducted on your taxes each year regardless of how much you deposit and reduce how much you income tax you pay. By reducing that financial burden, you keep more money in your pocket. With an HSA, your funds do not disappear and roll over year after year. If you are not contributing at least the same amount you are spending on healthcare, you are giving money to the IRS.
#4: You pay too much for health insurance
Take a look at your paycheck to see how much you are spending each pay period for healthcare. Instead of spending large amounts of money every month on health insurance premiums, consider contributing to an HSA and watch your dollars grow. And if you are one of many Americans forced to purchase insurance through an exchange, you may be shocked at the price of a traditional plan with a lower deductible. The lower premiums of HSA-qualified plans commonly outweigh higher deductibles.
#5: You spend a lot on prescriptions
If you require prescription medication on a regular basis, the cost can be overwhelming. You may be spending hundreds of dollars each month on top of your premium and deductible. Your health insurance plan may even have a separate prescription deductible. With an HSA-qualified plan, your prescriptions all count toward your deductible and once your reach the out-of-pocket max, you don’t have to pay a penny more, not even a copay. And you can always pay for qualified prescriptions with tax-free funds from your HSA.
#6: You are tired of being told no
Many insurance plans limit coverage of certain types of treatment and service, such as acupuncture and therapy. Or perhaps your favorite doctor is no longer part of the network your employer selected for you. Medical decisions should be made by you, not your health insurance policy. Yet, it is very common to be told no. An HSA provides a unique way to pay for your desired treatments at a discount because you are using tax-free money.
#7: You want to save and grow your investments
If you are a saver and like to reduce spending, an HSA may be right for you. Remember with an HSA: your tax liability is reduced, you can work to increase your earnings through an investment strategy, your contributions can be made pre-tax and any interest earned is not taxed.
If you grow your HSA and accumulate a balance into retirement, after you reach the age of 65 you can use the money tax-free on qualified medical, vision and dental expenses not covered by Medicare. Or, you can withdraw the balance and pay income taxes much like a 401(k).
The benefits of HSAs are numerous and hard to overlook. If you want to have more control, spend less, reduce taxes and the opportunity to make money off of contributions, a health savings account could make sense for you.
Nothing in this communication is intended as legal, tax, financial or medical advice. Always consult a professional when making life changing decisions.