Healthcare and medical treatment is soon going to cost high for people. So it would be beneficial to save money from now onwards in order to have a healthy and problem free life. The Health Savings Account (HSA) provides such a similar alternative to people. In the year 2004, January 1, the HSA was put into action in compliance with the Medicare Prescription Drug, Improvement, and Modernization Act, in order to empower people to look out on their own health issues and save funds for the similar cause. There is a resemblance in organization in between the HSA and Individual Retirement Accounts (IRA), which was introduced by former President of the US, George W. Bush.
The Benefits of HSA
Opening a Health Savings Account (HSA) can yield lots of advantages for people. These are illustrated below:
- HSA relieves people from taxation issues. The cash that is deposited by the employee’s recruiters and boss into the HSA is free of income tax. Even there will be no application of income tax on the money that is deposited by the employee himself/herself, although he/she has not filed the income tax returns. In addition to this, the HSA can itself yield money by spawning interests or by venture income, and that money produced is also completely free from income taxes.
- HSA offers complete portability and independence to the employees to own the account. It is not like those accounts that were used to be managed by the employers themselves. Once HSA is opened in the name of an employee, he/she will have complete authority to manage his/her HSA. Although the employee shifts job from one company to the other or becomes out of a job, the HSA will continue to remain with him/her and the person will be in a position to shell out insurance premiums through the HSA. This means the HSA remains with a person throughout their life.
- An HSA relieves people from the tension of their present and future healthcare expenses. The money that is deposited in the HSA can meet all hospital bills, medical treatment costs and also the charges that are added for buying medicines and drugs. In other words, HSA serve as a powerful self controlled health account, that can be monitored and managed at will, and can also be used to obtain medical cover for the rest of the life.