Offset Business Costs with High Deductible Health Plans and a Health Spending Account

Year after year, consumers experience the seemingly never ending increase in health care costs. As the national health care debate continues to shape the future of programs, individuals are finding ways to plan and prepare for medical expenditures today. The financial constraints on an average family make paying for the rising costs of premiums, services, hospital stays and prescription drug coverage more difficult. With the expected and unexpected costs of caring for one’s health and well being, the only thing that’s certain is consumers are spending more money yearly for medical care, goods and services. As medical costs continue to consume needed dollars, individuals and families alike are using any resource available to them to leverage cost savings programs. With the introduction of new medical programs including high deductible health plans, many consumers are signing up for a health spending account (HSA) to set aside money for medical expenses.

What are the benefits of opening a health spending account (HSA)? First and foremost, it allows an individual to put money aside into a HSA to use for medical expenditures without paying federal taxes. This lowers an individual’s taxable income and encourages savings for medical costs. This type of account is a product managed by the individual and portable from one employer to another. This portability is attractive to employees who don’t want to be handcuffed to one employer for their entire career. HSA accounts are different from employer managed flex spending accounts because they do not have restrictions and require usage in the IRS regulated year. While flex spending accounts allow individuals to reimburse themselves for medical expenses, it must be used in the time frame allotted. This often leads to individuals using the left over money for unnecessary services and products. Unlike a flex spending account, HSA fund left unused can remain in the account to be used at a later date. HSA’s are often likened to IRA’s because they provide tax advantages if taken into retirement. Lastly, health saving account is the leading the wave of the customer driven health care. As companies work to manage rising health care costs, they will encourage and often incentivize employees to participate in high deductible health a plan which in turn encourages utilization of a HSA. Since this is where health care plans are going, obtaining and understanding the specifics of health spending account (HSA) guidelines will be important to the future health care consumption.

The advent of high deductible health plans is driving medical care customers to become better consumers. Gone are the days when an individual can see a doctor and pay five dollar copays for visits. Gone too are the days where hospital stays cost fifty dollars. Medical consumers will bear the burden of rising health care costs. Higher copays and coinsurance payments are driving consumers to make choices about medical consumption. Because the price point is changing and increasing out of pocket expenses, it is changing the behavior of the average health care consumer. These choices are driving consumers to separate necessity from desire. It is also working to educate medical consumers to use their benefits wisely because they are sharing in a greater cost share for usage. The health spending account (HSA) is a tool to manage an individual’s medical expenditures and benefits. It helps people put money aside to cover medical costs and reminds consumers that their savings in the HSA will go towards their medical consumption. As the nation continues to debate medical coverage and the cost associated with widespread coverage, individuals have the power to plan for their future and save money for medical expenditures for the coming year or their future.