Uses for Health Savings Accounts

A health savings account (HSA) is designed to give consumers more control over their medical spending by helping them pay for their healthcare. Health savings accounts provide healthcare consumers with important advantages, including tax savings and lower premiums.

Premium Savings

• Before you can open a health savings account, you must first have a high-deductible savings account. The monthly premiums on an high-deductible health plan tend to be much lower than those for traditional health savings accounts, so combining that account with a health savings account can save you a lot of money.

Tax Savings

• The money you put aside in a health savings account is tax deductible. That means you can save money on your tax bill just by opening and funding your HSA. For 2011, you can contribute up to $3,050 to a single plan and $6,150 to a family plan. That can save you money when you file your taxes.

Deductible

• You can use the money in your health savings account to cover the cost of your high-deductible heath plan. Paying those high-deductible costs can be very difficult, but the money in the HSA can make it a lot easier.

Healthcare Expenses

• You can use the funds in your health savings account to pay for doctor visits, prescription drugs and other medical expenses. You can also pay for prescription eyeglasses and contact lenses, and for dental care, as well.

Investment

• One advantage of a health savings account is that the money can roll over from year to year. Over the years, that means you can accumulate money in your HSA account if you remain healthy. You can use the money in your health savings account as an investment account, putting some of the money into mutual funds to help the money grow. You must still use the money for healthcare expenses, but if the account does well, you will have that much more to put towards your healthcare expenses.