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Understanding Medical Savings Accounts

An increasing number of folks are looking for alternative ways to save money, from scaling back on unneeded expenses to reexamining healthcare costs. Although some plans have been scrutinized in the past for “use it or lose it” policies, human resource experts state that medical savings accounts can be a smart savings choice for some individuals and families. Here we explain your medical savings account options.


Human resource experts state that medical savings accounts like HSA, FSA and HRA can be a smart savings choice for some individuals and families. Flexible Spending Accounts (FSA) allow participating employees to allocate part of their pay for medical expenses. These expenses may include co-payments and deductibles for doctor’s visits, medication at your pharmacy, and sometimes over-the-counter medications, among other costs. Since the funds are not subject to taxes, this could result in a hefty savings for some individuals. Large families may benefit most from such a fund. However, the funds contributed by the employee expire at the end of the year and cannot be used for any other expenses. If a FSA sounds right for your family, carefully consider the amount you contribute to the fund.


Health Reimbursement Accounts (HRA) are another option for those considering a medical savings account. In an HRA, your employer reimburses you for services paid for out-of-pocket which are not covered under your existing health insurance plan. This may include deductibles, co-payments, medications and other services as outlined in your employer’s plan. Unlike an FSA, you pay for services up front and are reimbursed by your employer after a claims process. The employer sets a reimbursement amount for their employees and can determine whether any unused funds are rolled over from year to year.


Health Savings Accounts (HSA) require the account holder to participate in a high deductible health plan. These funds are owned by the individual; the owner chooses how the funds are invested and can grow their account with investment earnings. HSA are rolled over from year to year, unlike FSA. Qualified medical expenses may be paid for using tax-free funds from this account. Unlike other medical savings options, owners can make deductions for other expenses, but be warned; purchases made for items other than approved medical expenses are subject to taxes and a 10% penalty for those under the age of 65.


Like any other investment, be sure to make your medical savings account selection carefully. YourFreeQuotes.com can connect you with health insurance agents who can answer any additional questions you may have about these plans. Simply fill out our secure online form today!