Since first being signed into law in December 2003 by the Federal Government, Health Savings Account plans (a.k.a. HSA medical insurance plans) are already a proven success & the number of people switching to HSAs from traditional health plans is growing greatly each year.  HSAs are here to stay & a few million have already come on board.  Health Savings Accounts are literally available today to any person over 18 in the U.S.  They offer significant financial benefits including tax, premium, & retirement savings to you, your family, and/or your business.  Knowledge is real power when it comes to your finances. Become informed.  I advise people not miss out on the extraordinary short & long term benefits that HSAs create.

Medical Insurance is the newest form of an investment vehicle.  Today, having an HSA qualified health insurance policy (component #1 – the health insurance policy) together with a Health Savings Account (component #2 – the savings account) is a very wise decision.  First off, from this point forward, we’ll refer to the two components just discussed above as one single entity, either a Health Savings Account, HSA, or HSA Health Savings Plan.  They all mean exactly the same thing.

HSA health savings plans are actually simple to understand.

A Health Savings Account enables you to:

1) Have access to a wide PPO network and in most all cases provides the coverage to allow you to continue seeing your current doctors & specialists.

2) Lower your health insurance premium by 25% – 50%.  To accomplish this, be sure to compare health insurance plans with different carriers.  An individual can typically save between $80 to $250 dollars per month when they change their plan over from a traditional health insurance plan to a HSA qualified high deductible health savings plan.  A family can save even more.  Now the next point is critical!   Since HSA plans all have higher deductibles than most traditional health plans, forget any negative preconceived notions you may have about having a plan with a high deductible.  Do not pay attention to what you may have heard.  Don’t be deceived.  Yes, you’ll now have high deductible insurance, but there are plenty of safety nets that will be there to protect you if & when the need arises.

After you are setup, the first step to take is to place the money you are saving from having a new lower HSA monthly premium and place it into your new Health Savings Account each month.  Realize that doing this doesn’t cost you anything; you are just transferring the money you are saving into another location.

3) Next, enjoy the IRS created triple tax advantages (see the "a-b-c" listed below) that only HSAs offer.  You can reduce your annual out-of-pocket income taxes up to $1800 or more per year.  Save EVERY year on these income taxes. View below your three main tax-saving pillars.

a) HSA Contributions (deposits into your HSA) are 100% tax free

b) The interest earned on all of your HSA account contributions are also 100% tax free. The choice of investments are yours and range anywhere from typical low-interest, virutally zero-risk bank rates to the widest range of stocks, bonds, & mutual funds. The level of risk is entirely up to you and you can increase or decrease it at anytime.

c) Make 100% tax-free withdrawals for virtually all medical expenses.  View a list of HSA Eligible Expenses.

While your funds grow tax free, you are now building a significant retirement account of up to several hundred thousand dollars.  If you must use the money to cover any part of your deductible, you may make a 100% tax free withdrawal.

Here is the point: All of these above benefits & factors strongly diminish the impact of having a high deductible plan.  Realistically there will be many periods of time where your money is only growing and never being withdrawn because you have little or no medical expenses.

Here’s another benefit.  The Internal Revenue Service (IRS) rule says that at age 65 the money from your Health Savings Account may be withdrawn penalty-free for any reason, not just for qualified medical expenses. In this case, you’ll pay just the regular income taxes, just as you would when withdrawing from your IRA. However, your income during retirement generally goes way down as will the taxes required to pay.  You will be paying much lower income tax on these withdrawals than before you were retired.  Finally, understand that the funds in your HSA are always yours, without exception, and they rollover from year to year.  You are also allowed to do a one time rollover from an IRA into a Health Savings Account without any penalty.

And yes, you may continue contributing to your IRA every year while still also making the maximum allowed HSA contributions.  Having both types of retirement accounts is the ultimate scenario, but if you can afford contributing to only one type…I would certainly recommend the Health Savings Account.  This is because HSAs are more than solely a retirement savings vehicle.  Read another article I have written about improved benefits and higher limits in 2009 .

The company HSAHealthSavings genuinely specializes in HSA plans so consider contacting us (for contact info, read below "About the Author"). The straight truth is that many people are rather unclear about HSA Health Savings Plans and what they truly accomplish.  Too often, an individual or business’s insurance broker has not kept them properly "up-to-date" on all of the many benefits available to them with an HSA.  It is not that these brokers are not competent.  But the question to consider is, what incentives do they really have to educate their clients on HSAs if doing so will lower their commissions?  Not much of one perhaps.  But you are the party who is really losing out.  Any licensed agent or broker is obligated by a legal fiduciary duty to serve his or her client’s best interest at all times.  This duty should be taken seriously, but isn’t typically enforced by the Department of Insurance.

Last but not least, although insurance companies are legally binded to offer HSA health savings plans in their line of products, they are not going out of their way to promote & publicize these plans.  Doing so would also lower THEIR profits.

Now you are probably starting to see the light.  As a consumer today you really have to take matters into your own hands and become authentically informed. The expert advisors at HSAHealth Savings are on a mission as millions of folks and their families are missing out on the tremendous financial benefits that are so readily attainable RIGHT NOW.  We are excited!  The benefits of health savings plans can literally transform one’s financial portfolio in both the short and long term.  And HSAs are actually beneficial for just about everyone, not only the wealthy, or just older folks.  Regardless of your income level, if you pay for health insurance at all, you owe it to yourself to consider and compare the benefits of HSA health savings plans versus the more traditional health plans you are accustomed to.

 




By: Andy Devore