How a medical savings account helps pay less bills from hospitals

Фото: Depositphotos

Medical Savings Account, or HSA ((health savings account) can be used as an additional tool to save money, writes resource Go Banking Rates.

In some cases, the HSA entitles you to reimbursable medical expenses. The owners of such bills receive several benefits at once: contributions to this account are not taxable, and you can use them at any time to pay for medical expenses.

Individuals and companies use HSA to pay for high treatment costs. Many employers contribute to the medical savings accounts of their employees. Due to the fact that this contingency savings plan does not have a validity period, it can be used even after retirement as an emergency reserve. Below - in more detail about what is a medical savings account (HSA) and what are its advantages.

What's happened HSA?

A medical savings account is a non-taxable savings account in a bank, created to help certain categories of the population recover the cost of medicine. An HSA account can only be opened by a person with health insurance that has a large amount of deduction. Many employers offer their employees to buy insurance with a high deductible and, in order to save, combine it with the HSA account.

How does work HSA?

You make pre-tax contributions for an HSA-sponsored employer, and your contributions are tax deductible. You can withdraw tax-free medical expenses from your account at any time.

The limit on the annual contribution to the HSA account in 2017 year is $ 3 400 for individuals and $ 6 750 for a family. If you are older than 55 years, you can additionally deposit $ 1 000 per year into your account. HSA contributions are accepted until the last day to pay federal taxes.

Account Rules and Requirements HSA

To open an HSA account, you do not need to get permission from the IRS, but there are certain rules and requirements that you must follow. You must have high-deductible health insurance, this year it is $ 1 300 for individuals and $ 2 600 for families. It is important to know that not all insurance with a high deductible is suitable for opening HSA.

Medical savings accounts may be opened by persons who are not considered dependent on other taxpayers and do not have an insurance plan. Medicare or any other auxiliary health insurance.

Фото: Depositphotos

How to open an account HSA

Only eligible trustees can open a medical savings account: insurance companies, banks, and persons approved by the IRS.

Many companies have a designated HSA administrator, but you can choose any other suitable trustee who will open and manage the account for you. Experts advise all the same to use the HSA administrator of the company in which you work - so you do not miss valuable contributions from the employer and your requests will be processed faster.

If you decide to do it yourself, look at HSASearch.com and find a suitable plan for yourself. The site has a search function that allows you to compare more than 350 HSA administrators with each other.

Advantages and disadvantages HSA

To understand whether a medical savings account is suitable for your financial strategy, you need to understand its advantages and disadvantages.

pros HSA

A lot of them. Decide for yourself whether it is worth opening this type of account for their sake.

• You can withdraw money without taxes to pay for medical services.
• There is no deadline for withdrawing money.
• Most insurance companies offer a simple accounting and billing system.
• If you change jobs, the HSA transfer process is simple.
• HSA can be used as an auxiliary retirement account.
• Many employers help their employees make contributions to a medical savings account.
• Money from your HSA account can be used to pay any out-of-pocket costs, including for co-pays.

Cons HSA

Medical bills have a few flaws that can push you away from this idea.

• Withdrawing money for non-medical expenses will result in a fine of 20% plus taxes.
• HSA administrators and proxies charge for their services.
• Your contributions may not cover all medical expenses.

HSA is right for you if your health insurance has a high deductible and you expect substantial treatment costs.

Read also on ForumDaily:

6 medical insurance facts that every New York State resident would like to know

Personal experience: cons of the Medicaid program

5 ways to save on Medicare insurance

Survive without insurance: how to get medical care in the US and avoid huge bills

How to avoid a fine if there is no health insurance

How to reduce the bill for treatment in an American hospital

Medical insurance in the USA: how to start a choice

Do you want more important and interesting news about life in the USA and immigration to America? — support us donate! Also subscribe to our page Facebook. Select the “Priority in display” option and read us first. Also, don't forget to subscribe to our РєР ° РЅР ° Р »РІ Telegram  and Instagram- there is a lot of interesting things there. And join thousands of readers ForumDaily New York — there you will find a lot of interesting and positive information about life in the metropolis.