What You Should Know About a Health Savings Account (HSA)

Health insurance is a hot-button topic in the country and the world today as everyone is trying to figure out the best way to insure the masses. But what about how you fit into the equation? What is the best way for you to cover yourself and your family in the event of a medical or health emergency? The following is a list of things to consider if you are thinking about getting a health savings account, or, HSA.

1. All money contributed to a Health Savings Account is pre-tax, meaning you can put it away for health costs and not have to worry about it next April 15^th!
2. There are limits per year for what you can contribute to an HSA according to the IRS. For example, in 2009 if you have individual coverage only you can contribute up to $3,000 whereas you can do up to $5,950 if you have family coverage.
3. Unlike a Flexible Spending Account where if you don't use your money in the plan year you lose it, with the Health Savings Account your money will roll over from year-to-year. This, in essence, makes your HSA like having another savings account, just for health care only!
4. If you leave your employer where you have a Health Savings Account and you go to another employer for your health insurance you can roll one HSA into the other. This helps take the question of whether to leave for a better job a little easier.
5. The money that you put into a Health Savings Account will accrue interest as long as it sits in the account. If you save up to a certain point you will even have the opportunity to pick different funds to invest in. Pair this with the fact that your HSA is pre-tax and you are saving a considerable amount of money!
6. If you participate in a Health Savings Account you can not also participate in a Flexible Spending Account, or, FSA. You can, however, participate in a dental and vision only FSA to save money for those specific instances in the same plan year.

As health insurance premiums and plans continue to go up and up it is a good idea to save on a pre-tax basis to cover as much as you can. Don't leave it up to your health insurer to explain these things to you as they might not be as excited for you to save money, check with your local government or employer for any other questions about a Health Savings Account.