Lower Your Family Health Insurance Costs With An HSA

The premiums on my low deductible health plan skyrocketed recently, so I began looking for the best pre-tax savings instrument for my situation. Flex spending accounts are a good way to do this, and they've been around for a while. Thanks to Bush 43 though, you now have a second product to look at: the Health Savings Account or HSA.

You might be familiar with the FSA through your workplace. It's possible your company's HR person will show them to you because they can help most people. Whatever you put into these accounts is done before taxes! The fact that you can take money out of the account before you even put anything into it is really nice too. The negative with a flex savings account though is that you have to guess how much you'll use, and if you guess wrong, you'll lose the money you have left in your account at the end of the year.

By contrast, an HSA allows the leftover cash to grow over time. It's like other tax qualified accounts in that you can allow the account to grow year after year, and there's no penalty for not using up the money. It has the same pre-tax benefits as the flex, and you can contribute up to the current health savings account contribution limits which vary for single people or family plans. Health Savings Accounts differ from flexible spending arrangements in that you only have access to whatever you've already put in it.

HSA's are also nice because you can withdraw tax free anytime for a bona fide medical expenses, if you are over 65 or disabled you can withdraw penalty free for any purpose but you have to pay taxes.

Even though there is some risk in the beginning, health savings accounts are a very good plan for most people. As it grows, the deductible you can cover grows, and your insurance costs will go down. Which seems like someothing we should want in our current health care crunch.

By the way, yes I am told you can use your HSA to pay for your massage as long as your health care practitioner recommends it!