Can you name all of the advantages of an HSA account? Here’s just a few:
- Lower your monthly health insurance premiums with a higher deductible. These HDHPs can be paired with an HSA
- You Can provide a savings buffer for unexpected or high medical bills
- Use the HSA to pay for current medical expenses, including your deductible and expenses that your insurance may not cover, or you can save your funds for future medical expenses
- You can withdraw money from your HSA at any time and for any reason
- They offer a triple-tax-advantage – tax-free contributions, tax-free withdrawals, tax-free interest on investment
I want to pose a question: Why do health insurance premiums go up? For quite a few reasons: people get more sick, procedures cost more money, medication costs rise… The list goes on. But I want you to consider this fact for a moment – Over the past 13 years salaries have risen at a rate of 43%. Pretty good, right? Now consider that over the same time period, insurance rates have risen 180%. That is a serious chunk of money going towards health insurance premiums. And it doesn’t seem to be getting any better (sad face).
Most companies offer some sort of (tax exempt) cash plan to help employees pay their medical bills. Not surprisingly, one of the most common issues that employers face is whether to use an HSA (health savings account) or an HRA (health reimbursement arrangement).
Common logic says that HSA’s are better bet for employees, right? You would be right. Except that this isn’t common logic, this is health insurance, where there is always more than meets the eye. A lot like a magic show, except kind of boring.