If your group insurance plan offers a Health Savings Account, there are excellent benefits to choosing this option at Open Enrollment. I’m going to list those for you so you know why you should make this choice when you have the chance.
How a Health Savings Account Is Structured
First, I’ll explain why you need a Health Savings Account, if you don’t already have one. HSAs allow you to put money into a special HSA account that is dedicated to paying your medical expenses.
Sometimes your employer may contribute additional funds that you can have come out of your paycheck, pre-tax. When these funds go into your HSA account, you can then pay for medical expenses with these tax-free dollars.
When You Can Utilize the Money in Your HSA
Health savings accounts allow you to have your money do more than just pay your health insurance premium. It also helps you pay medical bills like copays for office visits or deductibles. You can even use it for vision or dental expenses.
Using HSA money for medical expenses enables you to get a tax advantage, whether through your paycheck or at the end of the year as a post-tax deduction. You always want to make your money do more for you whenever possible.
An HSA Can Reduce Your Frustration with Health Insurance
Many people get frustrated with their health insurance. They pay a big premium and they feel like they’re not getting anything for it. An HSA allows you to get a little bit more out of it than just paying a premium each month.
When open enrollment comes around, how would you determine whether or not the health insurance you had is the right product for you? I always tell people, “Look at your past year. Look at how much you’ve had to visit a doctor or a provider or how many claims you’ve had.” A lot of people may not have a lot of expenses. Do some calculations to determine if your health insurance has been saving you money or just costing you money.
An HSA Can Even Help You When You Reach Retirement Age
Once you opt for the HSA plan, which might even be a lower monthly premium for you, you can choose to take some of that money that you’ve been spending and put it into an HSA account. This actually helps you save for retirement.
When you put money into an HSA plan, you don’t lose it. The money rolls over from year to year. It’s not like a Flexible Savings Account where you will lose it if you don’t use it by the end of the year. With an HSA, this is money that, once it gets in this account, it’s your money. If you were to leave that employer, or if the company were no longer in existence, that money’s still there for you.
If you’ve been putting money into a 401k or IRA, it’s not very easy to get your hands on it if you need it quickly. If you all of a sudden have a big medical expense prior to age 65, the funds in an HSA are instantly available. You can use this money for a medical expense without a penalty.
Using HSA Funds Prior to or After Age 65
Prior to age 65, you can access this money for medical treatment, dental care, vision care or other types of healthcare, and not be penalized for it. Then at age 65 and later, you can take it out for anything you choose. At that point, you’d just be taxed for the amount of money you take out of the account.
If you grow that account, you then have investment opportunities. So it can grow for you just like your retirement account would. So think about those benefits of HSA accounts. Then find out if you have that option with your group plan when Open Enrollment time comes. If you want more information about an HSA and its possible benefits to you, give us a call at MBhealth at (314) 544-5400.