Are Health Savings Accounts for You

Are Health Savings Accounts for You

Health savings accounts are a fantastic way of saving money and in fact are just like personal savings accounts within a bank. The only difference here is that the money in these accounts can only be used for medical expenses. Instead of your insurance company, you control all of the money within your health savings account. You can use the money deposited to invest in mutual funds, stocks, and bonds and the best part is that none of this money is ever taxed. You are required to have a certain type of health insurance known as a “high-deductible plan” in order to be able to open a health savings account. This type of health insurance plan is around to act as backup in case you need help with your medical expenses.

Should I Get A Health Savings Account?

Health savings accounts will have both pros and cons just like any other health care option out there today. When deciding whether or not to get one, be sure to consider your potential future medical expenses, how much control you want over health expenses, as well as your financial situation. For those that are currently healthy and plan on living without having to rely on medical care too much in the near future, a health savings account would be a great choice. However, if you are the type of person who already has medical issues or cannot afford the deductible, you may need to consider other options that are available to you.

Pros of a Health Savings Account

For one thing, you can easily decide exactly how much money you want to set aside for medical costs within the near future. Along with this, you are also able to control exactly how any of this money is spent. If certain funds remain unused, they never disappear and will be available whenever you might need them. Also, the money placed into this account can be deposited on a pretax basis or may be deducted from your taxable income.

Cons of a Health Savings Account

Unfortunately, with this type of option, it can be hard to budget correctly in terms of how much money you may actually need for health care. A perfectly healthy person could become sick out of nowhere. Also, people who are older and much sicker may not be able to save as much money as someone who is much younger and healthier. Also, if you have to withdraw money from this account at any time, you will have to pay taxes on it. If your age happens to be younger than 65, you will also be required to pay a 10% penalty on top of that.

How Much Can I Deposit Each Year?

According to the Internal Revenue Service (IRS), they decide how much you are able to contribute to your savings account each year. To keep up to date on the maximum amounts, you can check the IRS website for more information. Generally, in the past few years, the limit has been around $6,000 for family coverage and $3,000 for an individual. These limits are indexed each year and are adjusted accordingly for inflation.

How Can I Get a Health Savings Account?

You can either obtain an account on your own by researching for HSA-eligible policies from a variety of insurers. You can also get this type of account through your employer. If your employer provides health coverage, talk to whoever manages your benefits to see if you can get more information about an HSA. Some employers may even opt to contribute to your account but keep in mind that both your employer’s and your contributions combined must be below the maximum limit.



Insurance: A Guide

"Remember kids, I have life insurance" - Adam Savage

This is a guest article from Tatyana Levin

These days one must be financially savvy. Money is not easy to come by and should be managed carefully. With the availability of tools that make it easy to keep track of current events, the stock market, and even your own money, it would be almost a crime to not utilize these tools to make the best and most informed financial decisions. Unfortunately, the more there is, the more there is to keep track of. This applies both to tracking tools and money (the small curse within the comfort of having money to keep track of).

 The savvier ones of us dabble in investments, and the savviest make their living that way. The key is that they know what to invest in. Not magically, of course; investors do a significant amount of research to learn how to optimize their portfolios, but they have the understanding.

A grossly overlooked investment is insurance. This may be because is not typically referred to as an investment with the exception of whole life insurance that has a specific investment component within it. Webster’s defines the word “invest” as a commitment of money for a return and “insurance” as a guarantee. This makes insurance the safest type of investment, because your returns are guaranteed.  But returns are not always financial in the case of insurance. They can be, if there is an unforeseen accident, but the most certain return is the feeling of security.

Now there are many different types of insurance, and what you need depends on your current situation. Obviously you only need auto insurance, found using auto insurance leads if you have a car, and you only need renter’s insurance if you rent and have possessions that you would need insured. Insurance is for those who have something to lose. With an attachment to something, either emotional of physical (or dependence, not like physically being glued to your car), comes the fear that it will be damaged or ruined in some way. For example, if your house caught on fire, you would be devastated. What would add insult to injury is not having a way to recover from this horrible disaster.

 These types of examples are not unique to this article. That is the way that insurance is sold. As they say that clichés are clichés for a reason, insurance is promoted this way for a reason.  The foundation of the concept of insurance is uncertainty, and it is the same uncertainty that is conjured up when investing.

The main difference between insurance and investment is that not having insurance creates a feeling of uncertainty while investments by nature are uncertain. Therefore, investing in insurance creates security and is the only secure investment that exists (and is legal). Getting insurance should be one of the easier financial tasks if you apply all the resources available with technological advances like smart phones.

About the Author: This article was written by Tatyana Levin, a copywriter for InsuranceFiles.com