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How to Use Your Health Savings Account
Health Savings Accounts are the
newest entity of consumer focused health insurance. While it is common
knowledge how typical health insurance polices work and what they cover,
there are many unanswered question about how Health Savings Accounts
work. For instance, how they differ from typical health insurance
policies. What type of coverage you can receive under a Health Savings
Account and what type of medical expenses are covered in this type of
formulary.
Health Savings Accounts are
designed to help cover the cost of medical expenses. Not unlike typical
health insurance policies, Health Savings Account are designed to assist
individuals in paying for health care. The difference being, Health
Savings Accounts can pay for any qualified medical expense even if the
expense isn’t covered by the high deductible health plan. For example,
most health insurance companies do not cover the cost of
over-the-counter medicines, but Health Savings Accounts will cover such
expenses. If your Health Savings Account is used to cover qualified
medical expenses, then the money is tax-free. A partial list of
qualified medical expenses is available at
www.irs.gov. If money in your Health Savings
Account is used for purposes other than qualified medical expenses the
money will be taxed and are subject to a 10% tax penalty.
One of the most appealing aspects
of a Health Savings Account is its versatility. You are able to use your
Health Savings Account to cover medical expenses for your family as well
as medical services provided outside of the United States. A
policyholder is also able to purchase long-term care insurance with
their Health Savings Account.
Should you not use the entire
amount in your Health Savings Account at year’s end the unused balance
will automatically roll over year after year. After the age of 65 and
upon enrollment in Medicare you will no longer be able to contribute to
your Health Savings Account, but you will have access to the money you
have accrued in the account.
Every insurance
policy has red tape and rules you must abide by. Heath Savings Accounts
are no different. However, they are incredibly user friendly and
consumer based, thus allowing the individual the opportunity to pick and
chose restrictions and areas of participation, rather than have them
already mapped out.
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