The Advantages of the HSA Insurance Option


HSA is an acronym standing for Health Savings Account. Health Savings Accounts have grown considerably in popularity in recent years.  The premise of an HSA is simple. Health Savings Accounts generally come with a high deductible often $3,000 or more and have lower premiums. They are the equivalent of the term life insurance policy. Basically they are designed to help you avoid catastrophic outlays associated with unexpected health problems while keeping your monthly premium for health insurance coverage low.

Clearly, an HSA is not for everyone but Health Savings Accounts offer some significant advantages over traditional insurance options. Most people would be surprised to find that it is one of the most sensible options available, particularly in light of rapidly increasing health insurance premiums.  It is no surprise then that the Health Savings Account HSA option is one of the fastest growing segments of the health insurance market.

In addition to the high deductible, low premium features, HSA's have another really important advantage.  As the name implies, these are actually health savings accounts. The way this works is that you can contribute a certain amount of pre-tax money to your health savings account each month or each pay period. This money goes into your personal HSA account and can be used for any qualifying medical expense during the year or to offset out of pocket healthcare expenses. This can be important given that you are dealing with a high deductible health insurance policy.  But here is the best part. Any money you don’t spend at the end of the year stays in your account. You can actually build this account balance up over time to a very significant level. And if you change employers, you can take your money with you and roll it into an account with a new employer or just establish a personal HSA policy if you happen to be self employed.

The other significant advantage is that many employers want to incentivize their employees to participate in the HSA insurance option because it is less expensive for the employer (assuming they are paying a portion of the cost of insurance). As a consequence, many employers will offer to contribute additional money or match money that you contribute to your account each month. This operates similar to a 401K match. This means that the money in your health savings account can grow even faster.

With premiums on traditional health insurance plans rising at an average annual rate of between 7% and 12% or sometimes more, it makes sense to look for sensible alternatives to escalating health care expenditures.  The Health Savings Account is a great option to consider. Ask your employer about it.

One of the most significant findings regarding the health savings plans that have been adopted thus far is that consumers tend to change their health consumption habits when they are footing more of the bill. Because of the high deductible nature of the policy and because individuals are spending their own hard earned dollars on health care, people with Health Savings Accounts tend to be more careful about their health care expenses. They tend to use the emergency rooms less frequently and do more planning and even shopping around for the best prices. They don’t run into the emergency room or drag their kids in for antibiotic treatments every time they get a minor case of the sniffles.

The HSA is definitely here to stay and is a highly recommended and sensible alternative to traditional health insurance plans. In the future we will see a much greater adoption of this important health care option.