YOU ASK:

Do you need health insurance - Why not just an HSA account?

WE ANSWER:

Well, both can actually give you some level of coverage and it's really up to you to choose which of the two options will work best for you. Now don't be mistaken in thinking that the two of them are the same. They are not.

Here are the basic differences between the two:

Health insurance

  • This will pay for covered benefits (with you shelling out a specified percentage or amount as your share of the expenses).
  • Depending on the plan you have, your insurance will cover emergency care, routine check-ups, basic hospitalization and surgical expenses, prescription medicines and preventive medical care.
  • This can be bought through the individual market or through your employer (if it offers insurance coverage). You can have an individual plan or a family plan.
  • Those who want a plan that has low deductibles and where benefits can be used almost immediately will do good to get a health insurance plan rather than a health savings account.

Health Savings Account

  • This is like a savings account that is specifically geared towards your medical expenses. You make deposits (up to a certain limit of your earnings) into the account. The advantage with this is that the government allows you to set aside pre-tax dollars towards an HAS, which may result in substantial tax savings.
  • This is paired with a High Deductible Health Plan (HDHP). However, you can still use your HAS even if you lose your HDHP coverage. The funds that you have placed into the account will remain and will roll over to the next year. However, since you lost your HDHP, you may not use the money from the account, nor can you continue making deposits for as long as you don't have an HDHP.
  • You can use the funds collected to pay for out-of-pocket expenses not covered by the HDHP.
  • This can be used to pay for medical or dental services that may otherwise not be covered by a standard health insurance plan, particularly optional services such as cosmetic and elective treatments.
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