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Is a Health Savings Account Right for You?

texas health savings account (HSA's)There are many ways to secure affordable health insurance, including traditional PPO plans, HMOs and point-of-service plans. But one health plan that’s growing in popularity is the health savings account, or HSA.  HSAs first hit the health care market in 2004; they’re like personal savings accounts used for qualified health-care expenses, including doctor visits and prescriptions. As more and more people are losing their employer-subsidized coverage or otherwise needing individual health insurance, consumers are choosing health savings accounts to maintain coverage and to combat the rising costs of health care.

Before establishing a health savings account, consumers just need to be enrolled in a high-deductible health insurance plan. Pairing a high deductible plan with an HSA is a great way for an individual or family to maintain coverage in case of emergencies, but to also save money long term. If you don’t incur many medical expenses in a particular year, then your money is simply rolled over to the next year. And since contributions are tax-deductible and money in an HSA grows just like a regular savings account, an HSA is a great way to invest in your future.

Interestingly, Fox Business notes that employers are flocking to health savings account plans almost as readily as consumers, because these plans help employers reduce health care costs and provide more flexibility in how employees pay for their medical care. HSAs also give users more incentives to lead healthier lives, as being healthy saves their own money.

In choosing whether a high deductible plan paired with an HSA is right for you, “it’s really a personal choice of do you go with the higher plan, or the lower deductible?” says Nick Calabrese, vice president of consumers and product management at CIGNA. “People need to evaluate what their expected out of pocket costs are with each plan.” Another consideration is what expenses qualify under the rules of an HSA. For example, as of 2011 health savings account funds no longer cover over-the-counter medicines, but that’s not necessarily a permanent plan fixture, as plan rules are subject to change.

But overall, health savings accounts are seeing significant growth because they “help manage costs without sacrificing care,” says Calabrese. “If an employee qualifies for a high deductible plan this vehicle helps offset out of pocket costs.” And when that happens, both employee and employer win.

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