by Scott on February 17, 2010
Health Savings Accounts (HSAs) are an effective way of building tax-free savings to cover qualified medical expenses. Often used in combination with high-deductible healthcare programs, HSAs can be used to cover premiums, prescriptions and deductibles not covered by your standard plan.
Benefits of HSA Medical Expenses
If you’re contemplating whether or not to sign up for a health savings account, consider the following benefits.
- Extensive coverage: HSAs commonly cover a variety of medical expenses, including mental health costs (psychiatry and counseling), preventative and emergency dental costs, homeopathic care (acupuncture and chiropractic), annual physicals, over-the-counter medications, maternity costs, long-term care premiums and more.
- Potential roll-over programs: Many HSA programs roll over at the end of the year, rather than forcing the “use it or lose it rule.” This is not the case with all HSA administrators, however, so make sure you do your homework.
- Portability: Your HSA medical expenses are covered by your program no matter where you are, even if you’re out of the country or hospitalized while on vacation.
- Tax-deferred growth: Depending on your risk preference, you can achieve significant growth by opting for a health savings account that’s invested in mutual funds, bonds and stocks. If you prefer, many companies also offer a guaranteed rate of growth—without the investment risk.
Another advantage of owning a health savings account is that you can continue to cover HSA medical expenses when you’re laid off, between jobs, retired or receiving Medicare. In addition, HSA administrators make it easy to receive your savings through a debit card system, so you’re ready to pay expenses as they arise—without waiting for reimbursement.
by Scott on February 17, 2010
While Health Savings Accounts (HSA’s) are not the ideal solution for every individual or family, they are often a simple, tax-free way to save money on healthcare. Just like traditional healthcare plans, though, it’s important to choose an HSA administrator that caters to your specific insurance needs.
How to Choose an HSA Administrator
Before deciding on an HSA administrator, remember the following tips.
- Do your research. Gather information about several different providers, either online or through the mail. Compare features and benefits, ask about account-related fees and find out how you’ll access your money. Some HSA administrators reimburse you via check for medical expenses, while others provide a designated debit card to be used for HSA-eligible purchases, co-pays and insurance premiums.
- Find out what your investment return will be. Some HSA administrators allow you to invest your healthcare deposits in a mix of mutual funds, bonds and stocks—while others only offer an up-front, fixed-rate return. Choose your favorite based on the current market climate and the rate of risk you’re willing to accept. Remember, though, that not every HSA investment is insured by the FDIC.
- Ask around. If you have a friend or family member who is happy with their HSA, find out which administrator they use. If you are satisfied with your other health, auto or home insurance provider, inquire about whether they offer HSA coverage, as well. Adding the HSA deposits on to your current premiums simplifies the payment process—and you may get a discount for going through your existing insurance provider.
While it’s often easier to streamline your insurance policies by using the same company, you’re under no obligation to use your current insurance provider for your health savings account—especially if you’re dissatisfied with their fees or level of service. Choose an HSA administrator that is affordable—and offers the benefits, affordable charges and withdrawal method that best fits your budget, lifestyle and healthcare needs.
