Health Savings Plans: Protecting Your Savings

Health savings plans help protect you against crippling medical expenses, allowing you stay ahead of any future medical emergency. Choosing a good health savings plan also helps to reduce day-to-day healthcare costs. These days, there are many health savings plans that have been introduced in order to make health care more flexible and affordable for as many people as possible.  In this post, I’ll be going over a few of these health savings plans.

One of these plans is the health savings account (HSA). The health savings account was developed in order to reduce the healthcare costs of both employers and employee and at the same time offer a health savings plan designed to cover current as well as future medical expenses.  Additionally, health saving accounts offer tax-free benefits, allowing people to better meet medical expenses and help them cut their healthcare costs.

If you already have an Individual Retirement Account (IRA), you will understand the basic concept behind this type of health coverage. This plan is a medical form of an IRA where any money you deposit is tax-free, and savings can be used to pay for minor health expenses. You can then combine this with a low-cost, high-deductible health insurance plan (HDHP) in order to pay major medical expenses.

When choosing any medical plan it is very important to examine all your options and choose the plan that is best tailored to meet your needs. For instance, if you are between the ages of 54 and 64, you can contribute an additional tax-deferred amount, which can be converted to an individual retirement account (IRA), and if you withdraw funds for medical expenses you will not be taxed. It’s also important to know that any health savings account contributions you make will not affect your IRA limits.  In fact, it can help because it is yet another method to save and contribute to your taxed-deferred retirement.

There are also discount medical savings plans available to you, which also provide a means of building up reserves against any emergency medical expenses you may come across in the future. Even if you are healthy now, these could work as provisions that help reserve your funds for later use.

Although the employer and the employees can both contribute to their savings plan on a tax-deferred basis, if the employee should leave the company, he or she is entitled to take his or her account with them when they leave. However, if an employee decides to use funds for any non-medical expenses, they would need to pay the penalty and taxes on the withdrawal. However, the employer does has some legal rights and may be able to stop the employee from doing so.

Health saving plans are meant to be simple but they can prove complicated for someone when they do not neatly fit into a certain criteria or grouping. For this reason it is important to ensure that you do look at all the options offered and carefully consider which plan to sign up to before committing yourself to a single plan. Failure to do this could result in you signing up to the wrong health saving plan and finding that you are not getting all the benefits that you should or could get out of it.

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