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Health Savings Accounts: Just What the Doctor Ordered? Just when the cost of health insurance for self-employed professionals and small business owners was reaching the critical care stage, a new "consumer driven" health solution has hit the marketplace promising to reduce health insurance premiums and add tax incentives for health consumers. It's called a Health Savings Account (or HSA), and is part of the recent Medicare Prescription Drug and Modernization Act of 2003 passed last December. Actually, HSA's have little to do with Medicare or prescription drugs, but as it happens was a part of the same legislation. So, just what is an HSA and how do you start one? In the most basic terms an HSA is nothing more than an account funded with pre-tax money to be withdrawn as needed for lower cost medical services before the deductible has been met in a health plan. Contributing to a tax-advantaged account is a concept already familiar to anyone who participates in a 401k or IRA. The major difference is the HSA is much more of a transactional account used for medical service payments during your working years, rather than a nest egg accumulating for retirement. With an HSA the co-payment and pre-deductible portion of your health care expenses can now be paid with tax-deductible money from your Health Savings Account (some of which may by funded by the employer making a contribution). What induced lawmakers to create the HSA? It's inline with a new movement towards "consumer driven" health care, a concept generally characterized by more consumer choice. The proposed effect of the HSA is that overall plan premiums will be reduced while keeping intact major medical coverage, and basic or preventive health care will be paid with pre-tax dollars. Is it a good idea? The movement is not without detractors, but while individual or particular group cases may differ, proponents believe that HSA's will have an overall positive effect in reducing costs and keeping more workers insured. If you agree you'll need to meet the eligibility requirements for an HSA. Eligibility Contributions HSA Providers Jay Barker is the Editor of MyBizBenefits.com, a free independent benefit plan information source for small business owners and self-employed professionals. Email Mr. Barker at jaybarker@mybizbenefits.com |
This article was submitted by - Jay Barker | Please Rate/Review this Article - Recommend it to friends |
Health Savings Accounts: Just What the Doctor Ordered?
The Health Savings Account, Part Of The "consumer Driven" Health Initiate Is Introduced To The Public. One Person 401K This Article Covers The Newest Retirement Plan For The Self Employed Business Owner. Solve Your Health Care Headaches With A PEO! Learn how to solve your health care problems with a professional employer organization. |
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