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Health savings accounts (HSAs) have attracted a lot of public attention in recent weeks as lawmakers discuss new options for overhauling our health care system. HSAs have been around for a long time, but they may become even more commonplace in the near future. These accounts currently require you to be enrolled in high-deductible health care plans. As of this year, you must have a deductible of at least $1,300 for an individual plan and $2,600 for a family plan.
If you have an individual plan, you can contribute $3,400 into an HSAs. For families, this amount is $6,750. These funds can be used to cover basic medical expenses. Contributions towards your HSA can come from your employer, relatives or others.
What Are the Pros and Cons of Health Savings Accounts?
Contributions made to HSAs are tax-free. You do not have to report these contributions when filing your taxes. Withdrawals from your HSA and earnings on the assets in the account are also tax-free. You can use these funds for most medical expenses. Any funds leftover at the end of the year will rollover.
There are downsides to these accounts. Unless significant changes are made to existing laws, many people could be “left out” of the benefits provided by HSAs. Some individuals and families simply do not make enough money to contribute to these accounts. Medical expenses may also exceed what you have contributed to your HSA. If you have a chronic health condition, like diabetes, you may not have the opportunity to save. Older people may have more health problems, meaning they can save less. The cost of recovering from a serious accident may exceed what you have saved in your HSA.
No matter what course of action lawmakers take in the coming months, medical bills are likely to remain a problem for many Americans. Illnesses and other health catastrophes are unexpected. However, there are ways you can save on medical expenses. We have covered some of these options on our blog before.
Medical bills can be discharged or reduced in bankruptcy. People struggling with medical debt can benefit from speaking with one of the Kansas City bankruptcy attorneys at The Sader Law Firm. Our attorneys can help you look at all available options for relief.
