What employees need to know about Health Savings

Health care insurance often seems like a daunting topic and therefore it is often easier to just listen to what the media tells us than to actually read through the pages and pages of health care legislation.

Yes it is true that much of the health care jargon is difficult to understand, and it feels as though congress has written the health care legislation in such a way as to keep the average citizen in the dark as to all the options and benefits available to them. Many individuals avoid seeking health care insurance because they either do not want to do the research about a health care plan that is right for them or they believe that they cannot afford it.

However going without health care is a very risky gambling game to play with your life. One incorrect move and the house wins, and the house usually wins big. It is not worth putting yourself in financial ruin over! There is one health care option that few people know about that is affordable and does provide many benefits. This option is known as a health savings account.

A Health Savings Account is essentially a savings account that is meant for medical expenses.

In addition, the employer and employee can pay into it. In addition any Health Savings Account is protected from being taxed, and is often attached to a high deductible health plan (an HDHP).

A high-deductible health plan is a health care plan that provides coverage with a lower premium that you pay monthly. In return for the lower premium there is a higher deductible cost when you actually need coverage. However there are plans that exist where you can have a high deductible health care plan that provides 100% coverage once you have met the deductible.

These plans are often very beneficial to individuals that are generally healthy since their premiums are lower, and they rarely meet their dedutible cost. In addition, even though at first glance it may seem like people with serious conditions would not benefit from a health savings account linked to an HDHP - there are many benefits.

Also, a Health Savings Account is one that pays cash, and one can often receive quotes for procedures.When a physician is aware that the recipient is essentially paying in cash they are usually granted a discount. This in turn leads to cheaper health care coverage.

Furthermore, while understanding the benefits of the health savings account is important, it is also important to understand how the Health Savings account works and who is eligible for one.

An individual who is eligible for a Health Saving account cannot be any of the following : covered by a regular health insurance plan, enrolled in medicare, or claimed as a dependent. At times it is possible for an individual to switch out of their regular health care plan to a health savings account. Furthermore, once someone retires they are able to cash out their account with no penalty. However any of the funds that are not used toward medical expenses will be taxed as though they were income.

Now there are limits to how much an individual can invest into a Health Savings Account. In 2008 the limit for investment for an individual was $2,900 dollars, and the amount for a family was $5,800 dollars. Yet those individuals that are soon to be eligible for Medicare are able to invest more into their fund since they will soon be ineligible for it. Starting in 2009 they are supposed to be able to add 1,000 extra annually, until they reach medicare.

Remember that once you are enrolled in Medicare you are no longer eligible for a Health Savings Account. Although it may seem a little unnerving to step away from the traditional health coverage, Health Savings Accounts truly are the future, for they allow individuals of all economic backgrounds to be eligible for health care.

There is no minimum income that you have to prove in order to qualify for a Health Savings Account, and you are more likely to get better deals on your health coverage. A little research about health savings accounts is worth the gains you will reap when you invest in your self!