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Health Savings Account: An Ideal Way To Save For Future Medical Expenses

The Health Savings Account system owes its existence to its predecessor which is Medical Savings Account. This was developed as an incentive to taxpayers who were registered under the HDHP (High Deductible Heath Plan).  When one deposits money into this account, they are not subjected to income tax by the federal government. As an added advantage, the funds may be used to cover qualified medical expenses at any given time without being subjected to penalties plus, they are tax free.

The catch, however, is that one cannot purchase over the counter medication using these funds without a doctor’s prescription. This measure was put in place to avoid abuse of prescription drugs. People who choose to have Insurance policies with high deductibles are actually trying to save by reducing their monthly premiums. The funds deposited in the HAS account if not spent, roll over while accumulating annually. In comparison to health reimbursement arrangements which are actually offered by employers, the funds in a HAS account are owned directly by the individual.

The HAS Family Health plan is a constituent of consumer driven health care. This means that the Health Plan is put in place to reduce the cost of health care while in the same breath increasing its efficiency. Advocators of the HAS system say that it circumvents the red tape that controls the benefits allowed to a patient who has certain health care needs while at the same time, assisting the individual or family to save for future medical expenses.

This in essence, makes the public more responsible and opens their eyes to the choices regarding Family Health Insurance via the High Deductible Health Plan. The biggest difference between HAS and its predecessor MSA (Medical Savings Account) is that a HAS account is that it can be offered by any employer to all their employees irrespective of the size of the firm, while MSA was limited to firms with 50 or less employees and to self employed persons. Some opponents of this system believe that it is causing more damage than good to the American health care system.

Because of the high deductibles and low premiums, insurance underwriters say that most Americans subscribing to HAS have began to associate medical costs with their medical costs. This means that they will try their best to reduce their costs on medical care so as to increase or stabilize their bank account balances.  This has led to people being more attracted to cheaper health options while keeping their eyes open for fraudsters in the industry. It has also made people engage healthy practices in their day to day lives like dieting, jogging and swimming and many other activities to reduce their chances of visiting