Health Savings Accounts: Health Care Reform that You Control

It seems that the topic on everyone’s minds these days is health-care reform. Politicians on both sides of the aisle seem to be playing “hot potato” with one of the most controversial topics in America today.

One thing that everyone seems to agree on, though, is that our current system has it’s share of problems. At the top of the problem pile is the skyrocketing cost associated with health-care.

To put it in perspective for you, according to the National Coalition on Health Care:

• Employer-sponsored health insurance premiums increased by double the rate of inflation in 2008.
• The average annual premium for a family of four in 2008 was $12,700.
• Minimum wage for a full time worker in 2008 resulted in gross income of $12,168.
• Health-care spending is currently 4.3 times more than national defense spending (and that’s with two wars going on).
• Nearly 1.5 million families lose their homes to foreclosure every year due to unforeseen medical costs.

While it may seem like an insurmountable problem, there are things that you can do to ensure that you are not buried beneath a debilitating mass of health-care costs.

Taking Matters in to your Own Hands

First and foremost is taking control of your health-care spending away from the politicians and insurance companies. It may be months or years before we see any sort of major health-care reform. And who knows what form it will take?

Right now, though, you have the ability to exert control over much of your health-care spending. The Health Savings Account (HSA) is becoming increasingly popular as individuals, and employers alike, attempt to cut health-care costs. You can reduce your spending on health-care premiums while increasing your freedom to make health-care choices.

By taking advantage of an HSA you can reduce you premium expenditures through the use of a High Deductible Health Plan (HDHP). As their name implies, these plans have a higher deductible than your normal plan. For 2009, the plan deductible must be at least $1,150 for single coverage or $2,300 for family coverage. With the higher deductible comes a reduced premium – as much as 50% less in many cases.

Imagine what you could do with an extra $6,350 in your pocket this year.

That is where the HSA comes in. You put all or a portion of the money you saved on premiums into the HSA account to save for future medical expenses. You can contribute up to $3,000 if you have single coverage, or $5,950 if you have family coverage in 2009 It doesn’t go to the insurance company to fill their coffers. Thanks to the way the HSA was designed, you get a full tax deduction for every dollar you deposit. It stays in a tax-sheltered account for use by you and your loved ones.

Reaping the Benefits for Years to Come

The real benefit of the HSA comes when it is time to pay for your medical expenses. You can use any of the funds in that HSA for any qualified medical expense – completely tax-free. That’s right, you get a tax deduction when you make the deposit and qualified withdrawals are not taxable. You get the best of both worlds.

Qualified medical expenses could be doctor’s visits, prescription or non-prescription drugs or even COBRA premiums if you are laid off. The definition for “qualified medical expenses” is much broader than most insurance plans would normally cover.

And because you aren’t relying on your insurance for your day to day medical expenses, you don’t have to worry about all the paperwork and red tape that normally comes with a claim. You just make a withdrawal from your HSA. Easy.

Another reason that HSAs are growing in popularity is the elimination of the “use it or lose it” provision that plagued earlier health related plans. With an HSA, if there are funds remaining in the account at the end of the year, they roll over and continue to grow from year to year.

Self-Directed Investing Meets Health-Care

And if lowered premiums and greater health-care flexibility weren’t enough, you can invest the funds within that account as you see fit. Just like your IRA, your HSA can also be truly self-directed.

This means there is a wide array of alternative assets available to help grow your account. You don’t have to be restricted to the plain vanilla bonds and CDs offered by most HSA custodians. You can use your knowledge and expertise to make sure that every HSA dollar grows to its full potential.

With the proper tending, a self-directed HSA can ensure that you never have to worry about how you’ll pay for your medical expenses.

With so much uncertainty surrounding health-care benefits now and into the future, the HSA is a more valuable tool than ever before. You have the chance to truly take control your health-care spending. No need to sit around and wait for Congress to act. You already have the tools you need at your fingertips.

To learn more about how an HSA can help you stop worrying about health-care costs, contact an Account Specialist at 1-888-382-4727 and ask for our FREE in-depth report entitled “HSA: A Lifetime of Healthcare Benefits”.

Disclaimer: Equity Trust is a passive custodian and does not provide tax, legal, or investment advice. It does not endorse or recommend any contributor, company, or specific investments. Any information communicated by Equity Trust Company is for educational purposes only and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your legal, tax, and accounting professionals.