What are health savings accounts?

Health savings account is available for people who are policy holders of health insurance plan with high deductible. Lesser people are aware of the existence of such account give that flexible spending account or medical savings account are what people is more familiar with.

The health savings account is not the same neither with the medical savings account nor the flexible spending account. The two offer benefits to consumers in handling medical and health expenses and where their offers end, health savings account benefits starts.

There are significant differences that health savings account and flexible spending account have in certain areas that consumers must be aware of. First the money you put in your health savings account stays in your account year after year. This means that your fund rolls over from a year to another and so on. With flexible spending account you have to spend your fund at the end of the year for your money will not be kept for another year. If you do not get your money you will end up losing it by the end of the year. Another worth noting feature of the health savings account making it different from other health or medical related accounts is its portable nature. If you are an employee who plans to change employer, you do not have to worry about the money you keep in your health savings account. The money will come with you provided that the account is still connected to your health insurance plan.

What makes health savings account more attractive is the fact that it is free of tax. How much your money grow must not bother you for your health savings account will earn your fund extra money without you needing to pay any tax for the said growth. There will also be no tax necessary for you to pay if you make withdrawals provided that you use the money to pay for expenses related to medical or health payments.

This year, it is expected that the rules governing the medical savings accounts and flexible spending accounts will be modified. Investment restrictions are in line to regulate where the money in these accounts could go. Prescriptions and notes will also be necessary to be provided by doctors even with medications that can be bought over the counter. Any of these changes will not be applied to health savings accounts what you must be prepared for instead is the lowest possible deductible for health insurance policy (which is necessary to open a health savings account). For individual policies $1,200 is the minimum deductible in general.