The need for a medical savings account

A medical savings account is a specialized savings account. It is almost like a medical health insurance policy. The only difference is that you keep depositing the money into an account for the purpose of medical emergencies and there is no insurance which will kick in during a time of need. It is only your money which is being put to work.

This sort of a medical savings account will help you take up a high deductible insurance plan without any second thoughts. A high deductible insurance policy means that you will have to pay a huge sum out of your pocket in case of a medical emergency. But when you have a dedicated savings account for the purpose of catering to your health needs, you do not need to worry. The thing is that you will save on costly annual premiums that you might have to pay to the insurance companies if you were to take up a policy which has a low deductible. You can confidently go for a high deductible insurance policy given that you have the backing of your medical savings account.

You can take you money for any and every trivial medical purpose. It could be for eye glass repairs, dentist fees, hospital parking lot tickets, or even hearing aid accessories. It basically covers anything you may need which is directly or indirectly related to your health. This sort of a savings account is made for the employed. But there are two different kinds of accounts based on whether you are self employed or employed under someone else. Whatever contribution you make to such a savings account is totally deductible from your tax calculations. This is a boon for the self employed or other small companies and start-ups.

This sort of a medical savings account is best suited for a person who is in good health. Because if you were a really chronically ill person, an insurance policy would be better given that it would not be your money going to the hospitals coffers. A lot of smaller establishments offer such savings accounts to their employees with a view to provide at least basic health coverage to them. If you need to be a medical savings account holder, you need not have approval from the internal revenue service. But you do need a competent guardian to open the account on your behalf. This could include an insurance company, a bank or any other financial institution.

It can get pretty difficult to get a guardian to help you open an account. Most banks will not deal with such accounts. But most health insurance companies will be more than willing to help you open such a medical savings account. It is important that you ask around with friends and family before making a decision because there might be a lot of hidden terms and conditions which you might not understand while applying independently. Try talking to an insurance agent if you still are not able to figure out what to do about opening a medical savings account.