A health savings account (HSA) is a tax deferred medical savings account available to individuals currently enrolled in a high deductible health insurance plan. There are many benefits of health savings accounts that you can take advantage of. The money contributed to the account is deposited pre-tax, and can be withdrawn tax free if used for qualified medical expenses. Withdrawals for non-medical related expenses are taxed very similar to an IRA, in that they can be withdrawn after a certain age without penalty.
Main Benefits Of Health Savings Accounts
Health Savings Accounts are becoming popular because they offer several benefits to both consumers and employers. For employers, HSAs are viewed as less expensive plans because they are linked to high deductible policies, and since employees have to share more costs, they are less likely to use medical services they do not need.
For the employee, there are significant savings that can be had by using this type of health insurance. First, if you are relatively healthy and do not typically use much medical care, these plans have low up-front costs compared to other health insurance plans. Furthermore, employers still generally cover things like physicals by depositing a set amount each year into the HSA on behalf of the employee to cover these types of care.