The acronym "HSA" stands for "health savings account." These accounts are set up by employers, and they allow you to contribute money to act as a savings account for health-related issues. The main objective of these accounts is to lower burgeoning health care costs and to make you more responsible for your personal health.
Decisions
When you have an HSA, you are more in charge of the decisions you make with your health care spending. For example, you do not have to follow certain guidelines about which doctors you can go to or what prescriptions are covered or not covered.
Sickness
The costs of becoming sick or debilitated with an illness is not an easy thing to predict. When you put money into the account, you have to make a rough estimate of what you think you might need. If you get sick and do not have enough money in your account to cover it, then you are going to have come up with the money some other way.
Safe
Any money you put into the HSA stays in there until you use it for medical expenses.
Savings
When you contribute money to an HSA, it comes from pretax dollars. This can lead to less income tax you pay at the end of the year. These accounts also gain tax-free interest throughout their duration.
Penalty
Certain investment plans carry a penalty if you draw money out early. The HSA has a penalty as well. According to the Mayo Clinic, if you withdraw funds from your account for non-medical expenses before you turn 65, you have to pay tax on it plus a 10 percent penalty.
Transferable
When you work for an employer and set up an HSA, you can set it right back up with your new employer if you were to get another job.
Health Factors
If you get sick often or have regular medical problems, you may end up paying more with this account. People who are in good shape and are healthy are at an advantage because they will not have to take money out as often.
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