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Health Savings Accounts: Investments and Withdrawals

The United States of America has some of the highest health care costs in the world. This high costs forces most of us to purchase or obtain a health insurance policy. Without health insurance, a person faces serious financial difficulty or even refusal of care should they be injured or become seriously ill. Most of us look to our employers for health insurance. The cost of individual policies is far too expensive for the average person.

In 2004, President George W. Bush allowed for the creation of Health Savings Accounts. Employers of any size could offer this as part of their medical benefit plan. Health Savings accounts allow for funds to be deposited in an account. This money is tax sheltered until it is used and can accrue interest. These funds are to be used on medical expenses that your regular insurance policy does not cover. The idea behind Health Savings account was to encourage high deductible health plans and reduce insurance premiums for all.

Health savings account can function similar to an investment plan. However, the funds are only used for medical expenses. The health Savings account funds can be rolled over into different health savings accounts. This offers flexibility should you change employers. However, they funds can almost never be rolled over into 401k’s, mutual or other investment type funds.

A health savings account has some advantages over the employer 401k. All of the deposits in the health savings account belong to the account holder immediately. It doesn’t matter who put the funds in, they account holder has access to them as soon as they are placed in the account. Should you need immediate medical care your health insurance account funds are there and ready?

Withdrawing money from the account depends on the individual company. Most are now using a debit credit card system similar to most bank accounts. The card is simply swiped and the amount deducted from the account. Some still do the reimbursement plans similar to standard health care plans. Meaning you pay initially but hen are reimbursed through your account.

Health savings account can provide some advantages for everyone. Lower premiums and greater control over their future medical expenses to name a few. The account holder has access to the funds despite who put them in and the finds can be moved should the person change employers. The costs of health care are continually growing in America. A health savings account can be one way to off set some of those expenses.

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