Who Can Benefit From a Health Savings Account?:

As health care costs rise at a staggering amount every year, most Americans are wondering how they can continue to pay for their medical care, particularly if they have special health care needs. This is not an area that can be overlooked, particularly as the American population ages.

The United States Congress took this into account when they announced in 2004 a new type of health care savings plan. This plan is called a Health Savings Account or HSA and it is believed that it will bring a needed solution for many Americans concerned about their health care needs.

In brief, an HSA is a savings account that is allowed to gain interest, tax-free. The amount of money in an HSA can be used for medical expenses, insurance premiums and even prescriptions in many cases. Although this money is coming from your own pocket, the ability to write off your contributions on your taxes makes it worthwhile for many people.

Many employers are now offering to match or make contributions to your health care savings account, making them even more desirable. Although HSA's are fairly new, many employers are now starting to get in the swing of things and this can be a of great assistance for people with high medical costs.

Let's take a look at who can benefit from a health savings account.

High-Deductible Insurance Needs

If your current health insurance policy has a high deductible, this may mean that many of your procedures are not covered until this deductible is met. If you are unable to find an insurance policy with a deductible that is easily met, you may never even be able to take advantage of your health insurance plan. A health savings account allows you to use the money that is saved in the account for your health care needs, as it accrues interest. If you are using the money market or mutual funds option for your HSA, this can mean that the majority of your health care needs can be taken care of without spending as much as you normally would have to pay.

Families

Families who have an HSA can benefit from having an interest bearing savings account for their health care needs, particularly if their children need frequent medical care. The contribution limit for a family plan is much higher than it is for singles. Currently, you can contribute up to $5850 to your family health savings plan each year and this amount can accrue interest, tax-free. If you are having difficulty paying for extra procedures, meeting deductibles or paying for insurance needs, this is a great way to take care of your family.

People With Future Medical Care Needs

The money that you invest into your health savings account "rolls over" each year. This means that if you invest $2650 in the first year, and $1000 in the second year, by the third year, you would have $3650 in your health savings account, plus any interest that it earned during this period of time. The money you invest always rolls over, leaving you with the possibility of a significant health savings account at the end of five years. With current disability statistic showing that one in seven workers over the age of 45 are likely to become disabled, this investment method is very important. You will be able to use the money in this account for your health care needs when you need it most. Until then, it will simply accrue interest and wait for you when you need it.

Basically, anyone who has a health insurance plan, and needs to find a way to lessen their tax burden can benefit from a health savings account. As the plan matures, new benefits and regulations are being added that will assist Americans in finding more ways to pay for their health care and receive tax benefits at the same time.

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