A health savings account (HSA) can be a good addition to a health insurance policy.
Such accounts are designed to work in conjunction with high-deductible health insurance policies for individuals or families.
They provide a way to pay for health- and medical-related services that are either not covered in an insurance policy or not reimbursed due to the deductible in the policy not yet being met.
How an HSA Works
The funds deposited into an HSA are for paying health-related expenses. Money placed into an HSA is income-tax-exempt, and any unused funds may earn tax-free interest.
Within certain guidelines, the money withdrawn from an HSA may be tax-free when taken out to pay for healthcare expenses. Should funds still be in the account when the account holder reaches 64, he or she is actually allowed to withdraw money for any reason – healthcare-related or otherwise.
Other Benefits of an HSA
Along with providing a way to pay for healthcare services when they are needed, the funds in an HSA can offer other benefits as well.
One of the primary advantages is that funds in an HSA can be used for wellness and preventive healthcare needs.
By having money available to obtain more regular checkups, patients may be able to detect certain health conditions before they become more serious. In many cases, this could mean early prevention of serious ailments. This alone can provide priceless protection for loved ones.