The funds of health savings accounts may be used to pay for qualified medical expenses at any time without the liability of any tax. However, withdrawals for non-medical expenses are treated similarly to those in an IRA account. These accounts are a component of consumer driven health care.
Proponents of Health Savings Accounts, including the US Government, feels that they are an important reform that will help reduce the growth of health care costs. It will also increase the efficiency of the health care system. Health Savings Accounts encourage saving for future health care expenses and encourage to adopt High-Deductible Health Plans.
Benefits of Health Savings Accounts
HSA plans mainly benefit two groups of people, those who are healthy and those who are very unhealthy or pay a huge amount for medications. This is due to the fact that everything one spends on medications & office visits are credited towards the deductible. Once the deductible is met, HSA plans will pay for medications. The premium amount for a High Deductible Health Plan is generally less than the premium for traditional health insurance. A higher deductible lowers the premium cost.
Drawbacks of Health Savings Accounts
Many consumer organizations like Consumers Union, and many medical organizations, such as the American Public Health Association, have rejected Health Savings Accounts. In their opinion this medical savings benefit only the healthy, younger people and make the entire health care system much more expensive for the others.
|
