With tax time fast approaching I thought it would be a great time to talk about Health Savings Accounts. With our focus on caring for patients who are self insured or under insured this is one of the best options for reducing health care costs for our patient population. It is also one of the things that people surprisingly know fairly little about. We talk with patients about HSAs all the time and hopefully this will be more reinforcement for people to take the plunge and start their own account.
A HSA is a tax-advantaged savings account available for people with High Deductible Health Plans. HSA funds are available to pay for qualified medical expenses and the contribution is not subject to federal income taxes. Health Savings Accounts were created as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Currently the contribution limit for an individual is $3,050 and $6,150 for a family. If you contribute every year you can build up a sizeable amount very quickly. These funds roll over each year allow the individual to maintain a pot of money for unforeseen costs. Lets be honest, in the current US health care delivery system, unforeseen costs are a rule rather than something unique.
Another reason for writing this post is that I had a close friend two weeks ago who had a skiing accident with two very serious knee injuries that will both require surgery. Unfortunately for him he has a high deductible insurance plan with a $5,000 deductible and likely will have to pay 20% of the costs beyond the $5,000. The only thing saving him is the fact that he has accrued a sizeable amount of in his health savings account. Sudden unforeseen medical expenses can be devastating on personal finances and having a savings account dedicated for health care expenses can be a lifesaver.
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