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Pros And Cons Of Health Savings Accounts

We believe there are ways to get the healthcare you need without having to spend a lot of money. That's part of why we're here, so you can get affordable blood tests. Before 2016 ends, you should look into seeing if you qualify for a Health Savings Account (HSA). Not sure what that is? Read on. We'll be exploring the pros and cons of Health Savings Accounts.

What Is An HSA?

Before we can go into the pros and cons of Health Savings Accounts, let's make sure everyone is on the page with what they actually are. Put simply, it's like a savings account exclusively used to pay for healthcare expenses. It's a way to save up for a rainy day. The amount of chronic disease is on the rise in America. A good savings account can help manage those costs. However, in order to get an HSA, it's necessary to have a high deductible health insurance plan. The theory behind the HSA is that when you are spending your own money, you will do more research and get the best deal for yourself when it comes to healthcare.

Pros And Cons Of Health Savings Accounts

 

HSAs are not for everybody. For instance, you have to be under 65 to qualify or if you already have high healthcare expenses, then the requirement of a high deductible insurance policy might not be something you can do.

Cons

The number one con is that requirement to carry a high deductible health insurance plan. Our health can be unpredictable. While saving for a big emergency, you might be nibbled by a lot of little expenses that will come out of pocket with a high deductible, making it hard to put away money in an HSA. This means doctors visits and prescriptions costs will be entirely on you until you meet the high deductible.

Consequently, you may decide to forgo seeking proper healthcare in an attempt to put money into the HSA instead.

You may not save enough to cover the healthcare cost of your future disease.

Recordkeeping is crucial! When you withdraw money from an HSA to pay for treatment, it must be for a qualified health expense. Now, that isn't as limited as you might think. The IRS has a detailed list of what qualifies as "qualified health expenses." Acupuncture is on the list, as well as psychiatric care and alcoholism treatment, to name a few you might suspect would not be available.

You can only put so much money into an HSA on a yearly basis. For example, in 2016, you can only save $3350 as an individual and $6750 as a family.

HSAs are not free. Banks will pull out fees. Usually, there is a start up fee. There may even be a transaction fee or debit fee when you try to pull money out. In some cases, there is even a monthly maintenance fee. If these fees exceed what you think you'll be saving in taxes, an HSA is not for you.

Pros

You have more control over your own healthcare. You decide exactly how much money you put into the account and you decide when to pull that money out and for what expenses.

You don't pay taxes on the money you put into the account as long as what you spend the money on is part of the qualified health expenses list. If you spend it on something unqualified, not only will you pay the taxes on it, but you will also get a 20% penalty added to it.

Your employer can contribute to your HSA and that money is portable with you regardless of whether you still have that job or not. It's also easier for family to contribute to your Health Savings Account.

If you don't use the money in your HSA for the calendar year, it does rollover.

You do get interest on the money in the HSA while it's in the HSA. Depending on how much is in there, it might not be a lot, but it could offset bank fees. Also, some Health Savings Accounts allow for investment opportunities in mutual funds, just like with a 401(k) or IRA.

Preventive procedures (like breast exams & cancer screenings) are usually covered completely under health plans that are compatible with HSA eligibility.

Ball's In Your Court

Now that you know the pros and cons of Health Savings Accounts, do you think it's right for you? We always advocate taking control of your healthcare choices and this is one of those times where you get to decide what's best for you. And just so you know, yes, you can use your HSA to pay for Walk-in Lab tests.

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