Your employer offers more than one option for medical care. While you like the idea of group health insurance, there is also the matter of being able to cover the deductible and paying for services that are not included in the plan. That’s where the idea of medical savings and spending accounts comes into the picture. Since your employer offers more than one option, it pays to know what each one will provide and which one is best for you. Here is some information that will help.
Understanding the Different Types of Savings and Spending Plans
You will find that some plans are designed to help with high insurance deductibles while others are more focused on providing help no matter what sort of deductibles apply. Your goal is to determine which one works best for you.
A health savings plan or HSA is typically for those with insurance plans that have higher deductibles. The funds in the plan can be used for quite a few different types of medical expenses, including doctor visits, prescription medications, and tests ordered by your physician. After your insurance plan pays whatever part is covered under the terms and conditions, it’s possible to draw on the resources in your HSA to make up the difference.
A different approach is the flexible spending plan or FSA. These types of health spending account plans can be set up even if you have low deductibles and co-pays. Depending on how the account is structured, you can also use it for medical needs not covered by your insurance.
How Will the Plan Impact My Tax Obligation?
Most savings or spending accounts are considered pre-tax financial accounts. That is, you will not owe taxes on the money contributed until it is actually withdrawn. That helps lower your the tax obligation for the current year and defer paying taxes if appropriate when you use the funds.
What Happens to the Money at the End of the Year?
If you are enrolled in a health savings plan and don’t use the balance during the current calendar year, it will simply roll over to the following year. That’s helpful for those who are managing their health care needs with a policy including higher deductibles.
If you have one of the flexible healthcare plans like a health spending account, you may be required to exhaust the balance by the end of the calendar year. Your employer can provide specific conditions that apply to the plan you select.
Being prepared for unexpected medical expenses is a wise move. In the event of a major medical issue, the funds in one of these accounts could mean the difference between remaining financially secure and losing what you own. Compare the plans today and decide which one would be best for you. All it takes in using it a few times to see the value.
Benecaid Health Benefit Solutions Inc
185 The West Mall #80