Introducing Health Savings Plans 101
Health Savings Plans 101

Before you begin shopping for a Health Savings Account (HSA) plan, you should become familiar with some basic concepts of this type of insurance. Think of these facts as health savings plans 101.

Misconceptions About HSAs

The first fact about Health Savings plans 101 is that HSAs can cut your overall health care expenses by some 30%. But this is thinking about it in the long term. But HSAs are not designed to instantly reduce your your out-of-pocket expenses for a regular medical plan. For example, if you're paying $400.00 a month for total medical and dental coverage and then decide to enroll in an HSA plan, you should still plan on paying $400.00. The difference is that half of the monthly cost would go into the HSA account, and the other half to the insurance agency. It usually takes adequate time (perhaps over a year) to build up reserve funds in your account so that you can pay the higher deductible that HSAs require. HSAs do save you money—in the long run.

Who Can Qualify?

Health savings plans 101 says that just because you apply for an HSA doesn't mean you will qualify for the plan. Statistics observe that the most likely type of individual to qualify for an HSA plan are young, self employed people who have a clean medical history with few expenses. Though persons close to retirement age can qualify, often times due to funds they do not realize any significant savings.

Health savings plans 101 says that HSAs can reduce your income tax, which is always a good thing. Whatever you deposit into your HSA account every year is deducted from your taxable income. It works just as an IRA contribution would, and can be a source of significant savings on taxes. Also, money earned on interest and investments also come tax-free.

Health savings plans 101 suggests that investing in an HSA account is a good idea—provided you understand the conditions of the policy and are familiar with your medical needs. It's a plan, like many others, that can offer few benefits to some, but can be a lifesaver for others.