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Archive for the ‘Health Savings Account’ Category

Health Savings Accounts allow you to set up a tax-deductible account to pay for medical expenses that are not covered by your health insurance. These include expenses to cover your deductible, and other medical expenses like dental and eyeglasses. But many don’t realize that HSA funds can be used to pay for virtually any type of medical service, as long as it pertains to the treatment or prevention of a specific health condition.

Because money withdrawn from a health savings account to pay medical expenses is tax-free, anyone who has an HSA can funnel all alternative medical expenses through their HSA and get a tax write-off. This could include biofeedback, naturopathy, Ayurvedic medicine, aromatherapy, magnetic healing, reflexology, and the list goes on.

People who use complementary therapies are often very health conscious, and go to traditional physicians less often. So it does not make sense for them to be paying a high premium for a traditional health insurance plan with a co-pay, particularly when their medical treatments are not covered anyway. Instead, many are choosing a low cost high-deductible HSA plan.

Alternative Therapies Becoming Mainstream

Many hospitals are now offering complementary treatments. The website for the Memorial Sloan-Keating Cancer Center states that complementary therapies are used to “help alleviate stress, reduce pain and anxiety, manage symptoms, and promote a feeling of well-being.”

Some group health insurance plans are beginning to cover more complementary expenses, but there is still very little coverage for these expenses in individual or family plans. Those that cover chiropractic limit coverage to 12 – 20 visits per year, and a few will cover a limited amount of acupuncture. But very few if any cover hypnotherapy, Reiki, iridology, or faith healers.

Why Complementary Medicine

The conventional medicine practiced by most MDs is called allopathic medicine. The philosophy of this system is to treat disease and injury using counteractive methods. For instance, if you have a fever you may take aspirin to make it go down, if your cholesterol is elevated you may take a statin to reduce it, if you have heartburn you may take an antacid. The thinking is mostly focused on removing the symptoms of disease, and the primary treatment modalities are surgery and prescription drugs.

But there are other ways to look at things. Naturopathic medicine is based on the belief in the body’s own healing powers, which can be strengthened through the use of certain foods, vitamins, herbs, or other “natural” treatments. Traditional Chinese Medicine (TCM) is based on ancient Chinese theories about the balance of yin and yang. Ayurvedic medicine is based on principles of movement, metabolism, and structure.

Part of the growing use of complementary therapies is a reaction to the costs, side effects, and philosophy of conventional allopathic medicine. Physicians get much of their continuing education from the pharmaceutical industry, and they work in an environment where the insurers and the patients are both looking for a quick fix. The result is that the average 60 year old is now taking 5 regular medications, yet there is little expectation that those drugs will ever cure the health problems for which they’re being used. Many consumers see this, and instead are using other methods to try to get to the root of their illness.

What is Considered a “Qualified HSA Expense”

Qualified medical expenses have been partially defined in IRS Publication 502, and through various federal court rulings. There is no definitive list, but there are really very few restrictions as long as the procedure is for the treatment or prevention of a specific health condition. For instance, you could not use your HSA funds to pay for a relaxing massage for your own personal pleasure. But if your doctor recommends you get a massage for specific medical reasons, this is considered a qualified expense. Yoga would not normally be considered a qualified medical expense, but it would be if it was recommended as a physical therapy following some sort of accident.

Some may question why the government would give a tax deduction for someone to use some crazy energy vibration machine to cure their cancer. But this is as it should be. No one but you should be able to decide what type of treatment you will use for your own illnesses. By empowering individuals to manage their health as they see fit, HSAs encourage personal responsibility and help loosen the monopoly on healthcare that conventional medicine has had for the past few decades.

Do you understand health savings accounts (HSA)? These plans actually consist of two important parts, and they can benefit many people. But HSA health plans are not for everybody!

One is a higher deductible major medical insurance policy. The other one is the actual savings account.

The idea here is that the health insurance policy will cover the big bills. If the account gets funded, it provides the money to cover many bills that would not be included in a major medical policy, or it can pay bills until the deductible is reached.

There are some key advantages to having an H.S.A., but these will not benefit everybody. First look at some of the benefits. Then it will be easier to decide if you should be an H.S.A., PPO, or HMO!

The contributions the savings account will not be taxed if they are within current IRS limits. This means that a family can put away pre-tax income to use for health expenses. This makes that money go further.

Cash in the account will roll over if it doesn’t get spent. Hopefully, this gives a family or individual the opportunity to set aside enough money to help them with medical expenses. Some accounts even earn interest just like regular savings accounts.

In addition, the account may be used to pay for some health care costs that would not even be covered by major medical insurance. Some examples may be dental care, eyeglasses, or vitamins. Make sure you consult current tax rules and specific plans to see how the money can be spent.

Because the actual H.S.A. major medical comes with a larger yearly deductible, so the rates should be lower. Some insurers relax underwriting rules a bit for higher deducible insurance so there is also a chance that more people would be accepted. For those who are accepted, but may have some minor health conditions, there may be a better chance they will only have to pay standard rates.

By now, you may have figured out that some people can realize a big benefit from this type of plan. If you need an additional tax deduction, this is a great way to get it while saving for future health expenses. An H.S.A. also allows you to control your costs by paying less for major medical while saving for future expenses in a way that gives you tax advantages.

A health savings account can combine with a higher deductible major medical plan to benefit a disciplined saver who can benefit from tax deductions. The cash account will keep growing, so it can continue to grow from year to year. At retirement age, the money can be withdrawn with no penalty.

As mentioned before, these plans do not work out that well for everybody. The actual cash account can only help if there is actually cash there. If a plan member never makes deposits, there will not be any cash in the account when bills need to get paid, and there will not be any tax deductions!

You already understand the benefits of saving, and you’ve been saving diligently for awhile now.  But could your money be earning even more?   Even a slight difference in interest rates can make a noticeable difference in growing your savings.  It’s time to find out how much you could be earning – with a savings account interest calculator.  Here’s where to find one, and how to use it.

Compare Savings Rates Easily Online

To get started, you’ll want to find a reputable financial institution offering an online savings account interest calculator.  Most banks now offer free online tools that are entirely web-based with no complicated instructions to follow.  Look for a calculator where everything is laid out in an easy to understand way, which will let you add up your savings right away. 

Simply add in your starting amount, select the number of years, and how much in additional contributions you want to make, and the savings account interest calculator instantly displays how much you can earn.  Current market interest rates should also be conveniently displayed, so you don’t have to shop around to find a savings account that pays competitive, high-interest returns.  Play around with potential returns and see how much even a small difference in interest rate could add up.

Making “Cents” of Your Savings

The savings account calculator of your choice should also give you an easy to follow chart to understand your savings at a glance.  And if you need more help, this tool should also include helpful instructions to guide you through the easy process of using it.  For example, if you’ve always been confused by the APY or Annual Percentage Yield, you should expect to get a simple explanation that helps you make sense of returns, and find out how much you can possibly earn through the savings account.

Keep in mind that computers are great at crunching numbers, but market rates can change on a daily basis.  A savings account interest calculator is a great first step toward seeing if you’re getting the best possible rate for your money and give you a possible forecast for how much you could have saved up at the end of a certain time period.