Health Savings Account - Qualified Medical Expenses Guide

My Comments

• Health Savings Account - Qualified Medical Expenses Guide - 10/17/2006
  Continuation from below.... The main benefit of HDHP/HSAs to both individuals and small businesses are much lower premiums. In addition, covered individuals have the ability to pay for medical expenses tax free for themselves and their dependents - even if the dependents are not covered under the HDHP. Any money in the account at the end of the year rolls over year-after-year. The funds can continue to be used for medical expenses tax free until age 65, after age 65, the HSA funds can be used tax free for any purpose medical or non-medical. Most people won't use all of the money in their HSA account every year so this is a great way for many families to save for a medical emergency / serious sickness and/or retirement tax free. There are some drawbacks. For example, maternity is not a covered benefit even if you do pay your entire deductible. In addition, some people may sign-up for a HDHP because of the lower premiums and then not fund their HSA account. Then when they are hit with a major medical expense, they will have to pay out-of-pocket and will not have funds in their HSA to cover the expenses (although you can usually get an accident rider). However, if you are a business using a HDHP to cover your employees, you are allowed to put money into the HSA for their use to guard against this problem. As for employee retention and motivation, generally employees are happy with the HDHP because they get health insurance and help saving for retirement.
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• Health Savings Account - Qualified Medical Expenses Guide - 10/17/2006
  My intention on writing this guide was to direct people to know what medical expenses Health Savings Account (HSA) funds can be used for, because there is already a full guide for HSAs. Nonetheless, let me try and answer some of the questions presented. Most people have heard of a HSA account and mistakenly think of it as a type of health insurance. Although, it has to do with paying for medical expenses, it is actually just a bank account. A bank account that allows you to use tax-free money to pay for medical expenses. In order to sign-up for an HSA account, you must be enrolled in a High Deductible Health Plan (HDHP). The HDHP is the actual health insurance policy. This policy requires you to pay 100% of every medical bill until the deductible is reached - for office visits, shots, lab fees, emergency room visits, etc. This is different from traditional health insurance because with traditional insurance you only pay a % of each bill until you hit your deductible and then the insurance company pays everything beyond your deductible. With a HDHP you pay everything until you reach your deductible and then the insurance picks up 100% after that. I am running out of room, so I will post another comment on the advantages/disadvantages.
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