Healthcare costs rise every year for all Americans - employer, employee, self-employed, and their families. The US government is working on this, but their track record on reform is not so good (or fast). Meanwhile, Americans pay more and more for basic health care, at a time when many mortgages are going up and many people are unemployed or underemployed.
One solution that has worked for more and more families each year is the Health Savings Account. 10 reasons to consider an HSA:
1) HSA premiums are vastly cheaper than other healthcare plans.
You are immediately saving money. The renewal costs are also much cheaper than an HMO, PPO or other plans.
2) HSA will cover peripheral medical costs.
With many HMOs or PPOs, dental care, eye glasses, and eye surgery are not covered. HSAs can be used for this, and also acupuncture, psychiatric treatment,fertility treatment and more. See IRS Publication 502.
3) You control your medical care with an HSA.
There is no network. No one will force you to choose from a list of doctors or hospitals. With an HSA, you play an active role in every healthcare decision. Even the best doctor may benefit from having to explain his or her recommendations when you ask the right questions about your healthcare.
4) HSAs are tax-deductible.
All the money you deposit into your HSA is tax-deferred. Even if you spend it all on approved medical expenses, the money is still deductible.
5) Money saved in an HSA never expires.
Unlike a flexible spending account, the money in your HSA can grow for years until you need it.
6) HSAs can be filled from an IRA.
You can pay for your health care from your retirement account - one time. If you're short on cash, you can take a bit from your retirement and transfer to your HSA without a penalty.
7) With a self-directed HSA, your health care dollars can be an investment.
Your HSA money can join with your self-directed retirement funds and invest in real estate, gold, private stock, or a loan.
8) HSA investment earnings are tax-deferred.
If you make a good investment and earn thousands, that money will stay in your HSA until you need it, tax-deferred.
9) HSA money earns interest when you're not using it.
If you can't find a good investment, or between investments, the money in your HSA earns tax-deferred interest.
10) Contrary to common sense and popular belief, health care costs are not tax deductible for most Americans.
Healthcare costs must be 7.5% of your income to be tax deductible. Most Americans do not qualify for this, even in a bad health year.
For more information on HSA, see our Learning Center or ask a question.
Photo credit Brooks Elliot