An HSA is actually a consumer spending plan that is used for health care. It's a way for an individual to save for future health care costs while keeping the money available for emergencies today.
The way it works is that an individual and/or his employer can put a certain amount of money into the tax-favored Health Savings Account to save for future healthcare. There are certain amounts that you can save yearly, as follows:
* $3,000 per year in 2009 if you are single
* $5,950 per year in 2009 if you are a family, no matter what your family size.
If you are 55 or over, you can add $1,000 to these figures. This gives older employees an opportunity to "catch up" for the years they weren't able to save.
The HSA is only available if you are covered by a "Qualified High Deductible Health Plan."
The HSA can be helpful in multiple ways because it usually gives you more opportunities to use it than a regular healthcare plan does. For example, some of the HSA-included medical conditions (that may or may not be covered under a regular traditional healthcare plan) include:
* acupuncture,
* inpatient care for alcoholism and
* artificial teeth.
There are literally hundreds more procedures allowed under the HSA that make it substantially more valuable than the traditional health plan. This is one great reason to get an HSA plan started now.
Employers often use an HSA plan as an alternative to traditional HMO or PPO plans so that the employee has a wider range of coverage. Generally speaking, the HSA plan allows both the employee and the employer to make pre-tax contributions to the plan.
As a business owner, the HSA plan can be valuable to your business because it offers many benefits for you. Some of the benefits of these plans include:
* Your premiums are reduced -- this means you pay less for these plans when you switch over to them than you would with a traditional healthcare plan.
* Your renewal flexibility is better -- you have two contributions you can control: the health premium and the HSA fund portion. You can decide on each independently; they are then reviewed each year for any changes you may want to make.
* You can give more benefits to the employee -- You don't have to pay 100% of the insurance dollars to a carrier anymore because some of those dollars can go to the employee directly via his HSA when you fund this type of account.
An HSA account works effectively for both the employer and the employee and is one way to cut the rising costs of healthcare.
