Home > Tagged 'savings'Archives savings

Looking for a Way to Save Money?

Why not look in to a Health Savings Account (HSA)? HSA’s are designed to help employees manage their medical expenses and reduce health care expenses. Money saved in an HSA, if not used for medical expenses, remains with the employee for future medical expenses or as part of their retirement account. It is a way for employees to save money tax free and unlike an IRA there are no penalties if used at any time for qualified health care expenses.

HSA’s are tied to high deductible health insurance which means that employees will have to pay for medical care using their HSA until they spend their deductible. This provides both the employee and the employer added savings in premiums as high deductible plans are usually less expensive.

Here’s an example of how an HSA would work:

• John has elected to have a high deductible health insurance plan and will be saving $100 a month in premiums.

• John’s deductible with the new policy is $1200 which means that John will have to pay the first $1200 in medical bills before his insurance will make any payments towards his health care.

• John has calculated that he will need to deposit $100 per month into his HSA to cover the deductible.

• In order for John to get $100 in his HSA on a monthly basis, he only needs to have $80 come out of his paycheck because of the pre-tax status.

• John’s employer has received the same savings on the portion of the premium they have saved because of the high deductible plan.

• John’s employer has agreed to contribute $100 per month into John’s HSA.

• Between John’s contribution and his employer’s contribution, John will have $2400 in his HSA by the end of the year. With a $1200 deductible, John should have $1200 in his account at the end of the year that can be used for future medical expenses or for his retirement when he reaches age 65.

HSA’s are a great way to save on current health care expenses and at the same time, offer individuals a way to save for the future. It’s a no brainer.