Stretch Your Healthcare Dollars With a Health Savings Account (HSA)
The concept of putting money into special savings accounts for medical expenses is nothing new.
Flexible Spending Accounts (FSA's) have been around for years.
And so have Health Reimbursement Arrangements (HRA's).
But both of these employer-funded accounts differ significantly from Health Savings Accounts (HSA's), which have only been around since 2003.
So, what's so great about an HSA? It's portable.
Let's say you get your health insurance through an employer.
If you leave your current job, you'll lose any money you have in an FSA or an HRA.
But the funds in an HSA go with you to your next job.
It rolls over.
Traditional funds, like FSA's come with a "use it or lose it" restriction.
You predict how much you think you'll spend during the course of the year and plan your contributions based on that prediction.
If you don't spend the money by December 31st it's gone.
But for most people, medical expenses can vary greatly from year to year.
The beauty of an HSA is that the money you put into the fund during any given year will roll over at the end of the year.
It grows tax-free.
The money in your HSA account earns tax-free interest.
Whatever you don't spend from year to year becomes a kind of "rainy day fund" in case you're ever faced with a potentially catastrophic medical expense.
It pays for more.
Your HSA funds can be used to pay for a wide range of out-of-pocket expenses that haven't traditionally been covered by health plans, like long-term care insurance or dental care.
It rewards smart choices.
HSA's are a mandatory component of a type of insurance called CDHP, or Consumer Directed Health Plan.
These plans offer individuals access to information on the actual costs of medical services and procedures so that they can choose the best way to spend their health care dollars.
For example, if you needed a mammogram in Southern New Hampshire, you'd see prices ranging from $251-$848.
Do your homework, and you could save hundreds of dollars a year.
As you can see, HSA's can offer you substantial financial benefits.
However, they aren't right for everyone.
If you can't remember the last time you balanced your checkbook or cringe at the thought of making investment decisions, skip the HSA.
These funds do require hands-on management - usually online - and are better left to people who enjoy financial matters.
Flexible Spending Accounts (FSA's) have been around for years.
And so have Health Reimbursement Arrangements (HRA's).
But both of these employer-funded accounts differ significantly from Health Savings Accounts (HSA's), which have only been around since 2003.
So, what's so great about an HSA? It's portable.
Let's say you get your health insurance through an employer.
If you leave your current job, you'll lose any money you have in an FSA or an HRA.
But the funds in an HSA go with you to your next job.
It rolls over.
Traditional funds, like FSA's come with a "use it or lose it" restriction.
You predict how much you think you'll spend during the course of the year and plan your contributions based on that prediction.
If you don't spend the money by December 31st it's gone.
But for most people, medical expenses can vary greatly from year to year.
The beauty of an HSA is that the money you put into the fund during any given year will roll over at the end of the year.
It grows tax-free.
The money in your HSA account earns tax-free interest.
Whatever you don't spend from year to year becomes a kind of "rainy day fund" in case you're ever faced with a potentially catastrophic medical expense.
It pays for more.
Your HSA funds can be used to pay for a wide range of out-of-pocket expenses that haven't traditionally been covered by health plans, like long-term care insurance or dental care.
It rewards smart choices.
HSA's are a mandatory component of a type of insurance called CDHP, or Consumer Directed Health Plan.
These plans offer individuals access to information on the actual costs of medical services and procedures so that they can choose the best way to spend their health care dollars.
For example, if you needed a mammogram in Southern New Hampshire, you'd see prices ranging from $251-$848.
Do your homework, and you could save hundreds of dollars a year.
As you can see, HSA's can offer you substantial financial benefits.
However, they aren't right for everyone.
If you can't remember the last time you balanced your checkbook or cringe at the thought of making investment decisions, skip the HSA.
These funds do require hands-on management - usually online - and are better left to people who enjoy financial matters.
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