Pros and cons of health savings accounts
Since the medical insurance is quite complicated in the U.S., it is not rare that people undergo a medical procedure which turns out not to be covered by their medical insurance. In such situations, it comes as a relief if you have a certain amount of money saved for medical expenses. That is exactly what the health savings accounts are for. They are created so that they cover a single individual, their spouse or even both of them. They have their good and bad sides just like all other types of bank accounts.
Let us start with the advantages of health savings accounts. The first one is their convenience, since most of them are connected to a debit card. This means that, if you happen to undergo any medical treatment or procedure that is not covered by the insurance. You will be able to pay for the treatment and medications immediately without waiting for the medical bill to come. You can contact your card issuer and notify them to pay for the cost through your card, or you can even use it on an ATM, withdraw the money and pay in cash.
Another advantage of health savings accounts is that the money deposited on such accounts is not subject to the federal income taxes. This is especially convenient both for you and your employer if he is one of the account’s contributors. While we are at the contributors, another positive aspect of this account is that the contributor can be anyone, not necessarily only you or your employer. It can be your spouse, children, parents or relatives. Flexibility is another aspect to be mentioned o the plus side. As already mentioned, you usually get a debit card with this account and you can pay either directly through it or using the amount of cash you withdraw from it.
Additionally, you can use it if you change the health care provider and the funds on the card are rolled over every year, not requiring you to spend them before the year expires. Lastly, some health savings accounts come with an interest. So you can even cumulate some interest money over the months or years and end up having more money on this account than you have originally deposited.
When it comes to disadvantages, there are some of them to mention as well. Since the account does not require you a fixed amount of money to deposit nor it prescribes the minimum amount to deposit every month, you may neglect this account and find yourself in a situation where you will not have enough funds for a medical treatment.
Another disadvantage is that there may be some additional fees you will need to pay even if you cover for the treatment costs – some medications and medical treatments paid with funds from this account require paying the additional fees to the bank where you have the account. Lastly, this account requires you to keep record of all the funds you deposit or withdraw, as well as the medical expenses you have, in order to be sure that there are enough funds on the account and that you can count on them.