Dear John,
Read on to find out why Health Savings
Accounts are the biggest change in healthcare and
retirement funding since Social Security and
Medicare.
|
| Cash in with a Health Savings
Account...
...combined with a high deductible
health insurance
policy. |
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"HSA's are like an IRA on steroids."
- John Goodman, "Father" of Health Savings
Accounts.
Health Savings Accounts (HSAs) have
been around for some time, and Congress made
them available to all Americans in 2004. Yet the
vast majority of Americans are either unaware of
them, or are unaware of their benefits when
combined with a high-deductible health insurance
policy. To understand their benefits, we must
unlearn what we have learned about health
insurance.
Simply stated, an HSA is like an
IRA, except that you can use the funds AT ANY TIME
for healthcare costs.
According to one expert, HSA's represent the
biggest change in healthcare and retirement
funding since Social Security and Medicare. They
allow individuals to save hundreds of thousands of
dollars, tax-free, for their future medical
expenses or retirement.
It's hard to dispute the value of a
retirement account that can compound earnings
tax-free. Incorporating the added capability of
using those funds for healthcare costs makes them
an even greater tool. But the biggest benefit of
all is that, without an HSA, you are likely just
handing money over to an insurance company...
money that you could be investing for
retirement.
|
| Without an HSA, you are likely just
handing money over to an insurance
company...
... money that you could be
investing for
retirement. |
|
Like any other insurance, the purpose of
health insurance is to spread the risk of a
devastating loss across a risk pool, and through
time in the form of regular premium payments. This
has evolved into a situation where most
policies employ high premiums and low
deductibles.
An HSA-compatible policy works in contrast to
this norm: they use lower premiums and higher
deductibles. In 2006, the national average monthly
premium for traditional policies was $173, and $92
per month for HSA-compatible. The average annual
deductible was $1,001 for traditional and $2,596
for HSA-compatible.
These numbers vary widely, depending on the
state of residence and other individual factors.
It is not unusual to find HSA-compatible premiums
for a half to a third of traditional premiums. The
best advice is to check it out for your particular
circumstances.
The payoff comes by investing the premium
savings into the HSA, where they can compound
tax-free. If you incur significant medical costs,
you are protected by the insurance, and you have
savings to use for the deductible (though you are
not REQUIRED to tap your HSA). If you don't
incur significant medical costs, you are growing
an an asset tax-free for retirement (when the
funds can be used for ANY purpose).
In short, with a Health Savings Account,
combined with high-deductible health insurance,
you pay yourself rather than the insurance
company. |
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BudgetLife.com, on the Internet since 1996,
provides consumer services for mortgages,
insurance, and annuities. As independent agents,
we have access to hundreds of lenders and
insurance companies. So consumers will always
receive the absolute best deal available for their
financial needs.
Best wishes from our family to
yours,
Ryan Burt
BudgetLife Financial Services
(800)
505-6106 | | |
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