High Deductible HSA

Health insurance is an important instrument of safeguarding one's health and financial interests. The advantage of having a health insurance is that in case of any medical emergency or problem, the insured individual gets medical treatment, most of which is covered by the insurance companies. One genuine problem that many people face is that the premium of a health insurance policy is very expensive. This premium which has to be paid on an annual or monthly basis is known as the cost of the policy, and is decided on the basis of several different factors ranging from age group to medical conditions. The high deductible health savings account is a program that helps people to overcome the difficulty of expensive premium.

High Deductible HSA

In reality the terms 'high deductible' and HSA imply two different things. The term high deductible basically means a high deductible health insurance and the HSA, is of course the health savings account. Though these two concepts are totally different they are closely related.

High Deductible Health Plan (HDHP)
The HDHP is basically a health insurance plan with high deduction. Now one might wonder that what exactly is a high deductible plan. In most of the insurance policies, when a claim is made by the insured person, he or she has to pay a certain percentage of the claim out of his or her own pocket, before the insurance company starts the coverage of the expenditure. This concept is applicable in many cases save some really expensive policies. The deductible proportion is principally denoted in percentage or in direct dollar amount. As the name of the insurance plan itself suggests, the HDHP is an insurance policy where the deduction amount is quite high. The advantage of having such a policy is that the premium is low which makes the policy affordable. The policy, however, has a disadvantage that in cases where you file a claim, the proportion that you pay out of your own pocket is quite high. Hence, people tend to use the high deductible insurance plans as supplementary plans. There are certain high deductible health plan pros and cons which can be taken into consideration.

Health Savings Account
The HSA plan or the health savings account is a tax benefit savings account that can be opened by virtually any person, the only condition being that the person must have the coverage of health insurance deductible plan, where the volume of deductible is high. It is also not mandatory to have the high deductible insurance plans to be in the name of the account holder. The account holder must simply be covered under such a plan. The health savings account can be opened in almost all banks and credit unions, which are entrusted with the duty of being custodians or trustees of such accounts.

The health savings account is established with the sole intent to aid people who cannot avail health insurance. In the account, funds for medical purposes can be deposited and withdrawn as per need, and the best part is that they are not taxable. In cases where these funds are not used, they are rolled over. The big plus point it that unlike the usual medical insurance or health insurance, there is no fixed minimum premium account that is to be paid. There is, however, a certain limit on the maximum amount that can be deposited in the account. For a single person it is $3,050 while for a family it is $6,150. In cases where the person is above 55 years of age, the limit extends to $1,000. The only drawback of the high deductible HSA, which you might suffer from is that as of 2011, you won't be able to purchase an over the counter medical product with the help of funds from this account. These conditions basically make the high deductible health savings account, a good alternative to the usual and sometimes expensive health insurance plans.

The high deductible health insurance, HSA and other small insurance polices together can be sufficient to protect you from financial risks arising from medical emergencies.