Is it the right move for you?
When you look into the different health insurance options available, you might start to go cross-eyed. Many employers offer choices that vary widely, including HMOs, PPOs, and health savings accounts. At first glance, the numbers look great for an HSA. This works as a tax-free savings account, and operates alongside a high-deductible health insurance plan. For some people, this offers flexibility and control over health care spending that more traditional plans do not offer. Before you jump in, take the time to ensure an employer-sponsored HSA will work in your best interests.
When an Employer-Sponsored HSA Helps
Of all the insurance options available, an HSA gives you the lowest required insurance premiums. It does this because you are only purchasing insurance for catastrophic claims. The high-deductible insurance plan you purchase does not cover your typical doctor's appointments. Rather, you save up money in a tax-free account, and then make your own choices about when to seek care and what doctors to use. The theory behind the accounts is that, when you are using your own money, you will spend it more carefully than if you use regular insurance.
For some people, this is an ideal choice. When you can save regularly and build up value in your account, it offers tremendous freedom. Some people work for companies that make contributions to the employer-sponsored HSA accounts, which helps you build that savings up quickly. The money is also yours, even if you leave your job or do not spend it all in one year. It works essentially as a savings vehicle, except that you can only spend the money on health costs.
Not Right for Everyone
Not everyone will benefit from an employer-sponsored HSA. If you have difficulty saving regularly, you may not have the flexibility to pay for medical expenses through this account. Similarly, before you build up savings, you may not be able to afford the care you need. If you have young children, you may need the coverage a traditional insurance plan provides, rather than being able to rely on saving up for when something happens. And those with conditions that will require expensive treatments may find they cannot afford them. Many people who sign up for HSAs choose to wait for medical care until they have more saved up, which can be dangerous for you or your loved ones.
Making the Right Choice
If you are relatively healthy and earn enough to save money away for your health care costs, an employer-sponsored HSA, combined with a high-deductible health plan, provides a nice option. It comes down to knowing your physical and financial health, and making decisions based on a realistic assessment. Having the option is great for people who can take advantage. When it comes time to select a plan through your employer, weigh your options carefully and make an informed decision for yourself and your family.
Equal Housing Lender