Since the Affordable Care Act’s long term life is up in the air, it’s time to start looking at other health care options to help you with medical bills in case you need medical help. This might leave the option of a health savings account as one of your only options, at least for a short time period.
A health savings account (HSA) is a medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan. The benefits of having one is that it’s tax free and you can rollover anything you’ve accumulated from past years. The downsides are it’s only available if you’re in a high deductible health plan and unavailable if you have Medicare, Medicaid or Tricare coverage.
If you have one of these high deductible insurance plans now, it’s not a bad idea to have a HSA. Even if the ACA goes away, it won’t be immediate, which means any money you’ve saved will still be tax free if you need it. The most you can put into it is $3,400 for individuals and $6,750 for families; if you’re over 55 you can add an extra $1,000.
If you’re employed, you can have your contribution automatically deducted from your paycheck, which is the easiest way to go. Otherwise, you can add money to it whenever you want. Also, you can decide to invest your contributions, which could help you build your health funds (it could also go the other way; something to think about).
You’ll get what looks like a debit card and be informed of your balance monthly, and that’s what you’d use to make your payments. It’s pretty simple, and easy to track.
On the other hand… if you’re going to go through all that trouble, it might be just as easy to create a savings account and start funneling more money into it just for this use. True, it’s not tax free, but you’ll have total control of it and not have to worry about whether or not the ACA health plans are going away. Right now one of the houses of Congress is advocating a HSA health system, so it’s possible that starting one might be a safe bet, but it might not be the same type of plan it is now.
In the meantime, you still need to make sure you have health care coverage for the time being. The penalties for going 3 months in a row without coverage could be as high as $2,085 for the year, or 2.5% of your income… whichever is higher. Protect yourself; your health is worth it.