Health Savings Accounts -Are they part of the solution to reforming healthcare?

Health savings accounts are one of the many types of health insurance plans available for Americans. These accounts are owned by the individual and contributions to health savings accounts (HSAs) are paid on a pretax basis. Therefore, they are tax free medical saving accounts. Now, there are yearly limits imposed by the federal government on the amount of pretax dollars that can be deposited into a health savings account ($3,250 for an individual and $6,450 for a family in 2013). What makes them attractive is when there are leftover funds at the end of the year; the funds can roll over and be used at any time in the future. So, if you are relatively healthy and are mandated under Obamacare to purchase healthcare insurance, having a health savings account makes a lot of sense.

There are several advantages to having a health savings account. First, they will reduce your tax bill because taxable income will be deposited into this tax free HSA. Second, the HSA money that you do not use for your health care will grow with tax free earnings and can be utilized in the future for your healthcare needs. Also, these HSA plans tend to have lower premiums and usually avoid the high increase in rate hikes seen in other traditional healthcare plans. The costs of these premiums can be lowered further by using higher deductible insurance plans. Another advantage is that many of these HSAs with high deductibles represent a maximum out-of-pocket limit for both the individual and family coverage plan. Therefore, the out-of-pocket cost may be the $5,000-$10,000 deductible in the HSA account because after the deductible is met, the insurance then pays 100%. So, for catastrophic care such an unexpected accident or illness, an individual will not go bankrupt trying to pay for an illness/accident.

The main advantage is that the individual and family who have this account will have more control over both their healthcare decisions and their healthcare costs. This will have the effect of decreasing the overall cost of healthcare in our nation because the individuals who have this health savings account will be more informed about healthcare issues and will be more cost conscious, since the money comes from their own savings and they are dipping into it when they use the healthcare system. Naturally, they will be more selective on spending their money.

Since health savings accounts are not dependent on government control but under an individual citizen's control, the current administration is not in favor of HSA’s and Obamacare’s regulations will have a major negative effect on these accounts. Only the federal government, through its infinite wisdom, tries to destroy an insurance plan where the individuals are more informed about their health and more informed about the actual cost of healthcare services.

Obamacare has also made it difficult for over 11 million senior citizens with Medicare Advantage (a plan similar to HSA’s) by eliminating federal subsidies for the insurance companies that utilize the Medicare Advantage plan. This also doesn't make any sense since the major amount of money spent on healthcare is in the last few years of an individual’s life.  Especially with the Medicare population, it is important that they be informed and knowledgeable of all the costs involved in their care. If we could promote the concept of HSAs for those purchasing health insurance and for those on Medicare; that would be a step in the right direction and result in decreasing the overall healthcare costs in our nation. There should also be an incentive that these health savings accounts become part of an individual's estate so that it can be passed on to their heirs.

A Health savings account is a health insurance strategy that should not be discouraged by our government but rather encouraged. This is an effective way to decrease the healthcare costs by creating an incentive for saving money for the individual and being able to utilize the money they pay for health care in the future for their own needs or to pass it to their heirs as an inheritance. Therefore, health savings accounts are one of the solutions to healthcare reform which makes sense from both an economical point of view and a quality of life point of view.