There are significant problems with our current healthcare system. From rising health insurance premiums to spiraling deductibles and out-of-pocket costs, the issues surrounding health care have been getting a lot of attention recently.
For years, politicians of both parties claimed to have all the answers, but it has recently become clear that their solutions are often counterproductive. In the meantime, ordinary workers are stuck with high prices, lower levels of coverage and a host of financial problems.
If you find yourself in such a situation, it may be time to act. Opening a health savings account can help you tame the high cost of health care, reduce your tax bill and buy you time while the politicians in Washington argue about the future. Here are some key things detailed by Affordable Healthcare 123 Tees, a company dedicated to making healthcare affordable to every American, that you need to know about what health savings accounts are and how they work.
Opening a Health Savings Account Could Lower Your Tax Bill
If you qualify for an HSA, opening one could lower your tax bill year after year. For those with a qualified high-deductible health plan, the contributions to a health savings account are tax deductible, and that could reduce your taxable income significantly.
The tax savings associated with a health savings account are particularly attractive for the self-employed, but they can be just as crucial for the average employee. If you are questioning the wisdom of an HSA, just run the numbers and see how the tax savings add up.
The Money Rolls Over from Year to Year
Those familiar with flexible spending accounts are no doubt familiar with the use-it-or-lose-it side of the equation. While new rules allow some FSA money to be rolled over, the majority of the funds must be used in the same year they are invested.
A health savings account is an entirely different animal, and much more advantageous for those who participate. If you do not use the money in your HSA this year, the money will still be there next year, making paying for significant illnesses and life events far easier.
You Can Invest Your HSA Money in Mutual Funds
While not technically investment vehicles, health savings accounts do have some investment elements. One of the most overlooked features of a health savings account is the ability to invest in mutual funds, and that strategy can yield some unexpected dividends.
Young people with no current health problems can use their health savings accounts to supplement their investment accounts, keeping a small portion of the money liquid and putting the rest into low-cost mutual funds. While that strategy can be risky, it is indeed something to consider.
Your Boss Wants You to Participate
By pairing health savings accounts with high-deductible health plans, employers can save a lot of money. That is why many employers now offer to fund health savings accounts for their workers, or at least kick in a significant portion of the money.
If your employer offers a high-deductible health plan, check with your human resources department to see how much of the HSA they provide. You may be surprised at their generosity, and that could give you one more reason to participate.
Health Savings Accounts Become More Powerful as You Age
No matter what your age, you can use the money in your health savings account to pay for things like deductibles and copayments, but the account can be used for more items as you age. Older Americans can use their HSA funds to pay for part of their long-term care insurance, and the funds can be used to pay for Medicare supplements as well.
Health savings accounts are so useful for older people that many now consider them an integral part of their retirement portfolios. If you open a health savings account when you are young and fund it faithfully year after year, you could end up with a substantial nest egg - money you can draw on to pay for health-related expenses in your golden years.
The Whole Family Could Benefit
Many people do not realize that the funds in their health savings accounts can also be used for expenses incurred by their spouses and dependent children. This is an important consideration, and one more reason to make a health savings account part of your financial plan.
No one knows what the future holds for health care, but it is clear politicians do not have the answers yet. If you want to lower your health care cost and take care of your family, you need to take a proactive approach, and opening a health savings account can be a step in the right direction.
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