HSA Health Plan overview

Given the rising costs of health care, most people find the current insurance premiums a burden on their paychecks. If you're the person who feels that you're paying too much for health insurance, you would appreciate a new way to cover yourself without the concomitant burdens. An HSA health plan may be just what you're looking for. Also, most health plans don't cover specialized areas like Dental care and are forced to take out supplemental insurance for additional procedures that can increase your burden dramatically. In the worst case scenario, you may be forced to pay for insurance when you're self employed or even unemployed, and this will really make your life hard.

A better alternative that is garnering much attention these days, are HSA health plans. The bedrock of this scheme is the concept that you can (gasp!) pay for your own healthcare (partly). But it's not as scary as it seems. As you will see in the main article, there are ways and means to utilize governmental diktats to help you devise a more efficient health care plan.

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How HSA health plans work

An HSA comprises of two parts. At the core of it, is a concept known as a High Deductible Health Plan (HDHP). An HDHP works on the concept that traditional insurance policies cost too much in monthly payments. And most people pay for coverage that they may never need. So what happens is that it lowers your health care premiums by a significant amount and increases the deductible that you pay. The deductible in a health insurance plan is the amount that you pay out of pocket before your insurance plan kicks in.

For example, if your yearly deductible is $3000, then this is the amount you will have to pay yearly for your out of pocket expenditure before insurance kicks in. This high amount is compensated for by lower premiums.

The second part of an HSA health plan is the HSA itself. And HSA stands for Health Savings Account. It is a special account that you are eligible open once you are enrolled in an HDHP. The unique feature of this account is that any money you put into it, is earmarked for medical expenses. The real benefit however, is two fold. First of all, the money in an HSA is tax deferred. Meaning that you don't pay income tax on funds that you salt away into this fund. Second, it functions just like an IRA (Individual Retirement Account), meaning that any balance or unused funds contribute to your retirement! This fund can only be used to pay for expenditures that are covered by your HDHP.

When is the HSA health plan right for you?

HSA health plans are meant for individuals who are willing to bet that they are not going to face too many medical problems. For major medical expenditures, the balance in the HSA will take care of the high deductible after which the insurance company pays the rest. In case there is no medical emergency, the HSA balance will continue to accumulate and will serve you well in your retirement! There are many HDHP schemes available and you must use the capabilities of this site to help you find one that suits your specific needs.