You have to save more! How many times have you heard that in your lifetime? If you’re like most Americans, you hear it all the time. A Health Savings Account is another way to save money. You may have just learned that your company is transitioning over to a HSA so here’s the rundown on it. Don’t worry. It’s not as difficult as you think.
Often, the Health Savings Account is used in conjunction with a High Deductible Health Plan. Your health insurance goes to work once you have met your deductible. We’ll talk more about that later.
Do you have a savings account at your bank or credit union? Most of us do although it’s probably not funded as well as you would like. If you understand how to use your savings account at your bank, you already understand a good portion of the HSA.
It’s easy. You, your employer, or both deposit money in to your account. This money can be used at any time for “qualified expenses.” What is qualified? You will get a list of qualified expenses but if you would have used your old health insurance card in the past for an expense, it’s qualified. The good thing, though, is that there is much more that’s qualified. Contact lenses, often dental expenses, even a wig!
How do you pay for these items out of your account? Have you ever heard of these little known pieces of plastic called credit cards? Of course! We all know how to use a credit card and that’s what you will receive to spend money out of your health savings account.
Why did your employer go to this kind of health care option? It saves them money in multiple ways. A couple of years ago I was looking for ways to cut costs from my home and auto insurance. I figured out that if I were to keep an account with $2,000 in it, I could save a sizable amount of money by increasing my auto and home owners insurance. The same way that mowing my own lawn costs less than having somebody do it for me. I’m basically insuring myself by keeping my own deductible funded.
It works the same with businesses. Buy enrolling you in to a high deductible insurance plan and giving you real money, it saves them money. A lot of money, in fact. First, you are going to do a little more comparison shopping for things like prescription medication. Rather than hopping over to CVS, you’re going to compare CVS and Walmart because it’s a benefit for you to spend the least amount possible out of your HAS. One of the reasons health insurance costs so much is because consumers do not comparison shop for services. Policies are set up that way. This type of policy encourages you to be frugal.
Why? Because the money rolls over each year. If you are young, you could have a huge amount of money in your HAS by the time you get older and are in need of more health related services. Oh, and your contributions are tax deductible.
That’s all for today. Stop by tomorrow and we’ll talk more about this. What is this high deductible health plan? See? It’s not too hard, is it?