Posted by
Civis on Friday, October 19, 2007 5:33:00 AM
I have a few questions. Why can’t someone with traditional insurance open up a Health Savings Account to allow him to save money on a tax-free basis for future medical expenses? Why am I confined to the choice of a Flexible Spending Account where I lose my contributions at the end of the year if I don’t use them? If I leave my employer, I leave my Flexible Spending Account.
If I had a Health Savings Account, I would own it no matter where I was employed. Contributions would roll over year to year and I could potentially save a large sum of money for medical expenses in my later years. However, I cannot enroll in the program with traditional medical insurance.
Now if I was promoting personal responsibility, I would allow Health Savings Accounts, similar to the concept of the 401k, where pre-tax employee dollars could be invested and used for qualified medical expenses no matter what insurance you had. I would eliminate the Flexible Spending Account which penalizes you for setting aside too much money and ties you to your employer. Why can’t there be a Health Savings Account that is not dependent on a certain type of insurance and allows for people to own an account that has tax benefits for qualified medical expenses? Why do many of today’s policies tie us to our employers and decrease many people’s entrepreneurial drive?
What is a Flexible Spending Account?
A Flexible Spending Account (FSA) is a tax-favored program offered by employers that allows their employees to pay for eligible out-of-pocket health care and dependent care expenses with pre-tax dollars. By using pre-tax dollars to pay for eligible health care and dependent care expenses, an FSA gives you an immediate discount on these expenses that equals the taxes you would otherwise pay on that money.
In other words, with an FSA, you can both reduce your taxes and get more for your money by saving from 20% to more than 40% you would normally pay for out-of-pocket health care and dependent care expenses with after-tax (as opposed to taxed) dollars.
https://www.fsafeds.com/fsafeds/summaryofbenefits.asp#WhatIsFSA
What is a Health Savings Account (“HSA”)?
A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.
You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account.
You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow.
http://www.treas.gov/offices/public-affairs/hsa/faq_basics.shtml#hsa1