Health Savings Accounts Pros And Cons
These health savings accounts pros and cons will hep you decide if they are right kind of savings plan for you. A health savings account is an account you can open to help save money for future medical expenses. The money in the account is tax free and may also be tax deductible.
- You must be under age 65. This is probably one of the biggest cons of a health savings plan. If you are older than 65 you are not eligible, and this is the group of people who may actually need a health savings plan the most.
- You must have a high deductible health insurance plan. Another big con with a health savings plan is that you need to already have health insurance with a high deductible. This means that your out of pocket expenses are still going to be high even with the savings account.
- Big savings at tax time. Since the money is tax free, a health savings account can save you quite a lot of money when it comes to tax time.
- Penalties for ealy withdrawal. This is a big health savings account con, and needs to be looked at carefully. If you make a withdrawal before you have an illness they will charge you with a 10% penalty. This money will also be subject to taxes.
- Employers can contribute. Another big benefit is that your employer can contribute money to your health savings account. This can help to provide you with more cash if you need it when it comes to having any kind of health problems. It can also either replace or be in addition to a traditional employer provided health plan.