Health Savings Account Pros and Cons
Not sure about a high deductible health insurance plan yet? Still on that 50-50 state of yes or no? Well here are some pros and cons of one particular type of high deductible health insurance plan, the health savings account.
First, for all those unfamiliar with a health savings account, I will give a short explanation to what it exactly is. A health savings account is a type of high deductible health insurance plan and as such it protects you from catastrophic medical expenses. Basically every month a portion of your paycheck goes into a health savings account tax free to used to towards your health expenses and in turn towards your deductible. This money is kept in this account and is transferred from year to year. Thus, you save money for your health care costs but at the same are protected from any big illnesses or injuries that might come your way.
Health savings account provide many benefits for those who choose this type of high deductible health insurance plan. For one a health savings account is a great and affordable way for anyone to get medical insurance. What is great about a health savings account is that you allocate how much money goes towards your medical expenses and not some arbitrary number that traditional health care plans have. Instead of paying outrageous premiums to insurance companies, you set where your health expenses are going to. Another great thing about a health savings account is that it entitles you to shop around for the most cost effective health care services. All this means is that you have more control over health care than the tradition HMO or PPO plans. Another great thing about health savings accounts is that they are tax free dollars, meaning every health related expense you have is essentially tax-free. All in all health savings plans just give a greater control over your medical expenses, which means more savings for you.
However, that is not say that health savings accounts are for everyone and anyone out there. Quite the contrary. Health savings accounts just like any other high deductible health insurance plans are for those who are healthy and know how that they do not use too much money for health care. Furthermore, your health or any one’s health for that matter is very unpredictable even if you are a healthy person who is to say you will not trip down the stairs tomorrow and break your ankle. Since, health is very unpredictable it becomes very hard to truly gauge how much health care will cost every month. This means that one month you might be using none of your health savings account money, but the next you might be over and have to take out of your savings to pay for the medical costs. In the end health is very unpredictable and thus health savings accounts may not be the best option on the block.
What is all comes down to in the end is what is the best for you and your body. Do you want more control over health care expenses? Or would you rather not take the chance of paying more on a bad month? The best way to judge for yourself whether a health savings account is good for you or not is by seeing how much money you track each month on health care expenses every month. This means keeping track of all drug store receipts, doctor and hospital visits. Then you can make a calculated decision whether or not you want a health savings account.