There has been so much talk about health insurance and associated costs in the media lately. In this post we'll look at the basics of Health Savings Accounts. An HSA is one aspect of an overall healthcare strategy that can be a helpful planning tool and help you save money on the high costs of health care.
What is a Health Savings Account (HSA)?
It's basically what it sounds like. It is a designated account for qualified medical expenses. Investopedia defines it this way, "An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual's employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision, etc."
Who can benefit from an Health Savings Account?
First, you have to have an HSA compatible health insurance plan. That isn't a good fit for everyone. HSA compatible plans require a high deductible. If you have a lot of medical expenses, this probably isn't a good fit for you.
What are the benefits of an Health Savings Account?
Health Savings Accounts have unique tax benefits that can help you save money. Money contributed is deductible; it grows tax free, and qualifying withdrawals are tax free. This "triple" tax benefit is very rare. More information from the IRS about HSA qualifications can be found here. The catch is you can only use funds from this account for qualified expenses or face a penalty if you don't.
Recent changes: Obamacare's effects on HSA's
The Affordable Care Act, also known as Obamacare, has made two main changes to HSA regulations, according to this brief clip. Over-the-counter drugs no longer qualify as a purchase you can make from your HSA. Also, the penalty for withdrawing funds, for non-qualified purchases before the age of 65, increased from 10 percent to 20 percent.
What's the difference between an HSA and a Flexible Spending Account (FSA)?
Unlike a Flexible Spending Account or FSA (which is only offered through an employer), HSA funds don't expire. If you think it might be a fit, check with your employer to see if an HSA is something your health insurance plan offers. If you don't have health insurance coverage through your employer, you have options to choose your own account.
Where can I find out about HSA options?
This article from 20 Something Finance, provides some helpful background on HSAs in general. It also has a helpful comparison chart of a number of HSA plans and where you can open them. Consider a Health Savings Account as an additional way to SaveUp!
This post was written by SaveUp's personal finance contributing writer, Catherine Hawley, CFP®.
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Most policies cover damage caused by wind and will cover flooding caused by a tree crashing into the roof, according to USA Today.
Most home insurance policies do not cover flooding. Flood insurance usually has to be purchased separately, according to Farmers.com.
Mortgage lenders usually force homeowners living near shorelines to have federal flood insurance, according to Reuters. So you're likely covered if you don't own your home outright and you live near a shoreline.
Even when a federal disaster area is declared, assistance comes in the form of loans that often have to be repaid, according to the Washington Post.
Many insurance policies do not cover damage caused my multiple sources, like wind and flooding, according to Reuters.
Generally, damage to cars caused by falling trees and flooding is only covered by comprehensive insurance, not by liability insurance, according to Fox Business.
Renters often have to pay separately for flood insurance, according to Smart Money.
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