A Health Savings Account is an alternative to comprehensive health insurance; it is a savings vehicle that allows people a different way to pay for their health care. HSAs enable you to pay for current health expenses and save for future medical and retiree health expenses on a tax-free basis.
You use HSAs in conjunction with traditional health insurance policies as long as the policies are "high deductible" policies.
HSAs were advocated by free market theorists as a way to control health care costs by introducing additional market discipline to the medical industry. These advocates hope that people with HSAs will be more discriminating about health care purchases and shop around, rather than go anywhere at any cost when an insurance company is paying for it. They also function as essentially a tax cut.
You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. The minimum deductible to qualify is $1100 for individuals and $2200 for families. HDHPs usually cost less than traditional health care insurance, so the money that you save on insurance can therefore be put into the Health Savings Account.
You own and you control the money in your HSA. You decide how to spend the money without a health insurance company telling you what to do. You also decide what types of investments to make with the money in the account in order to make it grow.
"Tax Relief and Health Care Act of 2006" was passed by both houses
as Congress in December and signed into law by President Bush on December
20, 2006. When he signed the law, Bush said it was estimated that 3.6 million
HSAs had been opened.
Presidential candidates positions (if any) on health savings accounts.
New for 2007
The maximum yearly contribution is now $2,850 for an individual and $5,650 for a family. The maximum HSA contribution is pro rated based on the number of months of the year that you are eligible. In other words, if the you have a conventional low-deductible insurance plan from January through April but then drop it the first of May, you can contribute $1900 for an individual.
People over age 55 can make "catch-up contributions"
in addition to normal contibutions. The limit for catch-up contributions
is $800 in 2007.
The maximum annual out-of-pocket amounts for HDHP is now $5,500 for individuals and $11,000 for families.
The government is also allowing a one-time-only rollover of Flexible Spending
Accounts into HSAs and a once-in-a-lifetime rollover of IRA funds into an
HSA (subject to annual HSA contribution limits.)
Eligibility for Health Savings Accounts
Finding Health Savings Accounts
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Crisiticism of Health Savings Accounts
Proposals to reform health care by socializing medicine bring howls of
protest from many. HSAs are in a way the opposite approach to health care
reform. While socialized medicine would effectively bring about a government
monopoly, HSAs encourage a competitive market to
decrease costs and increase quality.
This website is an informational site only. We do not buy or sell or recommend HSA plans.
