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…
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It is widely known that medical bills are a major reason people in the United States file for bankruptcy. Even with the passage of the Affordable Care Act, there are still ways to accumulate excessive medical bills. Depending on the situation, people can end up paying far more than their out-of-pocket maximums allow through a process known as balance billing. Chronic illnesses and expensive treatments are other reasons people continue to go into debt from medical bills. People who default on medical bills may face the following consequences: Wage garnishments: Hospitals or debt collection agencies can seek judgments against former patients who default on medical bills. This may allow them to garnish the wages of former patients. Calls from debt collectors: People who default on medical bills may receive phone calls and letters from collection agencies. Less money for other payments: People struggling to pay medical debt may not have…
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Last week, we discussed how health insurance plans with high deductibles can cause painful medical bills under the right circumstances. Dave’s story is a reminder of why it is important to plan carefully when selecting your health insurance policy. In fact, Dave’s situation might have been avoided if he had set up a health savings account (HSA). HSAs are used with high-deductible health insurance plans to allow policyholders to save money for future medical costs. The money saved in these accounts is also tax-free and rolls over each year. These accounts do not have ‘spend it or lose it’ rules. If you are healthy, have a health insurance policy with a high deductible (over $1,300 for individual coverage for 2016 plans) and want to save for future medical expenses, you might benefit from using an HSA. Money you put into an HSA can be used for out-of-pocket medical expenses, and…
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