Savings accounts are popping up in what some may consider unusual and unexpected places. One of these places was in a recent letter to Congressional leaders from President Obama, where the president mentioned health savings accounts (HSAs) as one Republican’s idea on how to resolve some of the health care issues across the United States.
What is an HSA?
A Health Savings Account combines a health insurance plan and a savings account. In the case of an HSA, the savings account is a way for consumers to put away money that they can use to pay for certain future health care expenses. Retirees can also utilize the savings account portion of an HSA to cover their health expenses on a tax-free basis. In order to take advantage of a Health Savings Account, you must have a High Deductible Health Plan (HDHP). The benefit of this type of plan is that it generally is less expensive than traditional health care coverage. The idea is that the money you save on health care insurance premiums can be deposited into the Health Savings Account. The money you deposit into the HSA remains under your control, so you can decide how to spend the money without obtaining permission from any third parties. You can also decide how to invest the money you deposit into the account in order to maximize your rate of return on the money.
Expansion of Health Savings Accounts
Republican Senator Barrasso recently suggested to Obama that Health Savings Accounts should be expanded. In response to this request and three other suggestions made by Republicans, Obama forwarded the suggestion to Congressional leaders to mull over. Obama concurred in the letter that many Republicans believe that HSAs used with high-deductible health plans promote the use of health care services among Americans that are cost-conscious. In essence, the use of this type of plan promotes health care and savings simultaneously.
Savings Accounts Come into Play
Health Savings Accounts, cash back reward savings programs, money market accounts and certificates of deposit (CDs) are but some of the accounts that have made their way on the financial scene to promote savings. If consumers were to take advantage of all of the options available to them, saving money would not be as challenging as some Americans make it out to be. The reality of the need to save shines through when even a health insurance plan offers a savings account feature for consumers to put away money to cover the costs associated with health care.
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