Health saving accounts (HSAs) is known as the type of tax-advantaged investment. These are account available only for individuals with HDHP (high deductible health plan). Whether your purchase health coverage or have it through an employer, it’s affordable.
Including many benefits, the combination of health saving account, high deductible health plan, and a lower-cost might be beneficial for an individual. Beside HSA is just like a personal saving account.
The health savings account offers many benefits and disadvantages too. Below mentioned some great benefits of Health saving accounts:
Save on medical expenses.
The Health Saving Accounts (HSA) help patients, including high-deductible health insurance plans, meet their budget-friendly costs. Eligible costs comprise an extensive range of mental, medical, and dental health services.
Save for retirement
Health saving account is the best plan for retirement. At the age of 65 above, you can use the money for any purpose without any penalty. The money you withdrawal to pay for eligible healthcare expenses stays tax-free.
Many contributors
The contributors can be your employer, sibling, spouse, or any relative whosoever require to add to your health saving account.
Portable
The money saved in your HSA remains available for future. Even when you change an employer, health plans, or get retired.
Pre-Tax Contributions
The contributions in HSA are made with salary reductions at your company or business. It never includes in your total income and is not directed to federal income taxes.
A person is In-control.
For your health saving account, you can decide how and when to save or spend money. That money belongs to you forever. It never expires; even you can take the money with you whenever you switch jobs and another high-deductible health plan.
Above all are few benefits of having HSA. Now have a look at the disadvantages of Health saving account:
Require the High-Deductible
You must have an HDHP (High Deductible Health Plan) which is required to qualify for Health Saving Account. It can put a financial burden on patients. It could be difficult for a person. These HSA plans have a higher than the normal deductible.
Penalties and taxes
If you are below 65, and you withdrawal funds then you will owe taxes on the amount with 20% penalty. But after 65+ age you don’t need to give a penalty but owe taxes.
Payment
Many health saving accounts require per-transaction fees or monthly maintenance. And it varies by one institution to others. Sometimes these charges are dismissed if you keep a set minimum balance.
Keep history
You must collect receipts and all records to prove your withdrawals. You can use them for qualified health costs.
However, despite the advantages of a Health Saving Account, there are many disadvantages too. So if you are considering choosing a HSA, then you must go for the right one. Many people think that health insurance is expensive or not worth it. But choosing a right HSA plans can change your life and reduce the tension of health issues.