Insurance vs. Savings: Knowing the Difference When It Comes to Your Health Care

The differences between health insurance and a health savings account are not always clear. In fact, this murkiness is likely responsible for the relatively low adoption rate of health savings accounts even though they offer a number of benefits over traditional health insurance. The differences between the two types of health care coverage are explained below along with some reasons why a person might choose one over the other.

What Is a Health Savings Account?

A health savings account (HSA) is really just another name for a high-deductible health plan (insurance plan) that has special tax-advantaged status. The basic premise is that high-deductible plans have lower premiums and so are more affordable. However, because they have high deductibles, people tend not to use these plans for routine health maintenance. To encourage people to undergo preventive care while keeping a handle on overall health care costs, it was decided to allow people to create tax-advantaged savings accounts from which they could pay medical expenses and the deductible of an HSA plan.

The savings account is really the heart of the HSA. It allows individuals (not companies or the government) to set aside a certain amount of money in a savings account each year. As long as that money is used for medical expenses, it is never taxed. The idea is that the government is making more of an individual’s income available for health expenditures by not taxing income contributed to an HSA.

This approach differs dramatically from standard insurance, which has high premiums but usually provides immediate, full coverage. For many people, traditional insurance premiums are financially untenable. The idea of the HSA is to provide an option that prevents people who cannot afford traditional insurance from going without insurance or from falling back into government safety nets, which tend to be a burden on taxpayers.

What Are the Benefits of an HSA Over Insurance?

For healthy individuals, HSAs, like those offered by HSAforAmerica.com, can reduce health insurance premiums and decrease the overall cost of health care. They are particularly advantageous for young individuals who see a doctor less than once per year. Money put into a medical savings account rolls over from one year to the next with the idea that people are continually saving for future health care costs that may arise in older age. In general, HSAs are beneficial because they

.   allow individuals to decide how much money they set aside for health care costs,

.   allow individuals to control how health care dollars are spent (no PPOs or HMOs),

.   ensure that the money belongs to the individual and not the employer (it follows the individual wherever he or she goes),

.   allow unused money to roll over each year, and

.   provide a tax benefit that improves health care savings as well as quality of life.

What Are the Benefits of Insurance Over an HSA?

HSAs aren’t for everyone. If a person needs health coverage to begin immediately and cover relatively large expenses (child birth, surgery, etc.), then the high deductible of an HSA will mean that the such a plan is too costly, in the short term, than a traditional health insurance plan. Health insurance is beneficial to those who

.   need immediate coverage,

.   find it difficult to navigate the complexities of health care systems,

.   find it difficult to save money each month, and

.   would take money from the HSA for non-medical expenses.

Right or Wrong?

The decision between traditional insurance and an HSA is a personal one. If you are young, relatively healthy, and able to set aside a bit of money each month, then give strong consideration to an HSA. Remember that if you have traditional health insurance, you cannot carry an HSA (though you can purchase a small catastrophe policy to cover you during the first few years of an HSA while you accumulate savings). Choose the plan that is right for you by following the tips above.

Ron Sheffer has worked in healthcare for many years. He frequently blogs about common questions everyday people have about navigating the healthcare system.

67 Responses to Insurance vs. Savings: Knowing the Difference When It Comes to Your Health Care
  1. Health Center
    April 19, 2018 | 10:37 pm

    Wow! This could be one particular of the most useful blogs We have ever arrive across on this subject. Basically Great. I’m also a specialist in this topic therefore I can understand your hard work.

  2. Easy Startup Business
    April 19, 2018 | 10:37 pm

    I’m also writing to make you understand what a really good encounter my friend’s princess undergone reading your webblog. She came to understand such a lot of things, which include what it’s like to have an amazing giving heart to have others effortlessly gain knowledge of several complex topics. You really exceeded my desires. Thank you for offering those warm and friendly, healthy, explanatory and even unique thoughts on that topic to Julie.

  3. Bathroom Floor Tile
    April 19, 2018 | 10:37 pm

    Wow! Thank you! I permanently needed to write on my blog something like that. Can I implement a fragment of your post to my website?

  4. School Learning Games
    April 19, 2018 | 10:38 pm

    Hi my family member! I want to say that this post is amazing, great written and come with approximately all significant infos. I¡¦d like to peer extra posts like this .

  5. Website Business Ideas
    April 19, 2018 | 10:39 pm

    Thank you for sharing excellent informations. Your site is very cool. I’m impressed by the details that you¡¦ve on this blog. It reveals how nicely you perceive this subject. Bookmarked this web page, will come back for extra articles. You, my pal, ROCK! I found simply the info I already searched all over the place and just could not come across. What an ideal web-site.

  6. Health and Fitness
    April 20, 2018 | 6:37 am

    I do not even know how I ended up here, but I thought this post was great. I do not know who you are but certainly you are going to a famous blogger if you aren’t already 😉 Cheers!

  7. News
    April 20, 2018 | 7:34 am

    I haven’t checked in here for some time because I thought it was getting boring, but the last several posts are great quality so I guess I’ll add you back to my daily bloglist. You deserve it my friend 🙂

  8. Health and Fitness
    April 20, 2018 | 11:16 am

    I was just seeking this information for some time. After six hours of continuous Googleing, finally I got it in your site. I wonder what is the lack of Google strategy that don’t rank this type of informative websites in top of the list. Normally the top web sites are full of garbage.

  9. Health and Fitness
    April 20, 2018 | 11:42 am

    Hi there, I found your site by way of Google while looking for a similar subject, your website got here up, it appears to be like great. I have bookmarked it in my google bookmarks.

  10. Health and Fitness
    April 20, 2018 | 3:25 pm

    I like this post, enjoyed this one thanks for putting up.

  11. Health and Fitness
    April 20, 2018 | 4:12 pm

    I do trust all of the concepts you’ve presented on your post. They’re really convincing and will definitely work. Nonetheless, the posts are very brief for novices. Could you please extend them a bit from subsequent time? Thank you for the post.

  12. Health and Fitness
    April 20, 2018 | 6:53 pm

    Hi, Neat post. There is a problem along with your web site in web explorer, might test this… IE nonetheless is the market chief and a huge part of folks will leave out your wonderful writing due to this problem.

  13. Health and Fitness
    April 20, 2018 | 7:22 pm

    Hello There. I found your blog using msn. This is an extremely well written article. I will be sure to bookmark it and come back to read more of your useful info. Thanks for the post. I will certainly comeback.

  14. Health and Fitness
    April 20, 2018 | 8:03 pm

    Valuable info. Lucky me I discovered your web site by accident, and I am stunned why this twist of fate didn’t took place in advance! I bookmarked it.

  15. Health and Fitness
    April 20, 2018 | 9:47 pm

    Thank you a bunch for sharing this with all of us you actually know what you are speaking approximately! Bookmarked. Please also talk over with my web site =). We can have a link alternate agreement between us!

  16. Health and Fitness
    April 20, 2018 | 10:30 pm

    I really enjoy reading on this site, it holds fantastic blog posts. “Something unpredictable but in the end it’s right, I hope you have the time of your life.” by Greenday.

  17. Health and Fitness
    April 20, 2018 | 11:28 pm

    You really make it seem so easy with your presentation but I find this matter to be really something which I think I would never understand. It seems too complex and extremely broad for me. I’m looking forward for your next post, I will try to get the hang of it!

Leave a Reply


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Insurance vs. Savings: Knowing the Difference When It Comes to Your Health Care

The differences between health insurance and a health savings account are not always clear. In fact, this murkiness is likely responsible for the relatively low adoption rate of health savings accounts even though they offer a number of benefits over traditional health insurance. The differences between the two types of health care coverage are explained below along with some reasons why a person might choose one over the other.

What Is a Health Savings Account?

A health savings account (HSA) is really just another name for a high-deductible health plan (insurance plan) that has special tax-advantaged status. The basic premise is that high-deductible plans have lower premiums and so are more affordable. However, because they have high deductibles, people tend not to use these plans for routine health maintenance. To encourage people to undergo preventive care while keeping a handle on overall health care costs, it was decided to allow people to create tax-advantaged savings accounts from which they could pay medical expenses and the deductible of an HSA plan.

The savings account is really the heart of the HSA. It allows individuals (not companies or the government) to set aside a certain amount of money in a savings account each year. As long as that money is used for medical expenses, it is never taxed. The idea is that the government is making more of an individual’s income available for health expenditures by not taxing income contributed to an HSA.

This approach differs dramatically from standard insurance, which has high premiums but usually provides immediate, full coverage. For many people, traditional insurance premiums are financially untenable. The idea of the HSA is to provide an option that prevents people who cannot afford traditional insurance from going without insurance or from falling back into government safety nets, which tend to be a burden on taxpayers.

What Are the Benefits of an HSA Over Insurance?

For healthy individuals, HSAs, like those offered by HSAforAmerica.com, can reduce health insurance premiums and decrease the overall cost of health care. They are particularly advantageous for young individuals who see a doctor less than once per year. Money put into a medical savings account rolls over from one year to the next with the idea that people are continually saving for future health care costs that may arise in older age. In general, HSAs are beneficial because they

.   allow individuals to decide how much money they set aside for health care costs,

.   allow individuals to control how health care dollars are spent (no PPOs or HMOs),

.   ensure that the money belongs to the individual and not the employer (it follows the individual wherever he or she goes),

.   allow unused money to roll over each year, and

.   provide a tax benefit that improves health care savings as well as quality of life.

What Are the Benefits of Insurance Over an HSA?

HSAs aren’t for everyone. If a person needs health coverage to begin immediately and cover relatively large expenses (child birth, surgery, etc.), then the high deductible of an HSA will mean that the such a plan is too costly, in the short term, than a traditional health insurance plan. Health insurance is beneficial to those who

.   need immediate coverage,

.   find it difficult to navigate the complexities of health care systems,

.   find it difficult to save money each month, and

.   would take money from the HSA for non-medical expenses.

Right or Wrong?

The decision between traditional insurance and an HSA is a personal one. If you are young, relatively healthy, and able to set aside a bit of money each month, then give strong consideration to an HSA. Remember that if you have traditional health insurance, you cannot carry an HSA (though you can purchase a small catastrophe policy to cover you during the first few years of an HSA while you accumulate savings). Choose the plan that is right for you by following the tips above.

Ron Sheffer has worked in healthcare for many years. He frequently blogs about common questions everyday people have about navigating the healthcare system.

67 Responses to Insurance vs. Savings: Knowing the Difference When It Comes to Your Health Care
  1. Health Center
    April 19, 2018 | 10:37 pm

    Wow! This could be one particular of the most useful blogs We have ever arrive across on this subject. Basically Great. I’m also a specialist in this topic therefore I can understand your hard work.

  2. Easy Startup Business
    April 19, 2018 | 10:37 pm

    I’m also writing to make you understand what a really good encounter my friend’s princess undergone reading your webblog. She came to understand such a lot of things, which include what it’s like to have an amazing giving heart to have others effortlessly gain knowledge of several complex topics. You really exceeded my desires. Thank you for offering those warm and friendly, healthy, explanatory and even unique thoughts on that topic to Julie.

  3. Bathroom Floor Tile
    April 19, 2018 | 10:37 pm

    Wow! Thank you! I permanently needed to write on my blog something like that. Can I implement a fragment of your post to my website?

  4. School Learning Games
    April 19, 2018 | 10:38 pm

    Hi my family member! I want to say that this post is amazing, great written and come with approximately all significant infos. I¡¦d like to peer extra posts like this .

  5. Website Business Ideas
    April 19, 2018 | 10:39 pm

    Thank you for sharing excellent informations. Your site is very cool. I’m impressed by the details that you¡¦ve on this blog. It reveals how nicely you perceive this subject. Bookmarked this web page, will come back for extra articles. You, my pal, ROCK! I found simply the info I already searched all over the place and just could not come across. What an ideal web-site.

  6. Health and Fitness
    April 20, 2018 | 6:37 am

    I do not even know how I ended up here, but I thought this post was great. I do not know who you are but certainly you are going to a famous blogger if you aren’t already 😉 Cheers!

  7. News
    April 20, 2018 | 7:34 am

    I haven’t checked in here for some time because I thought it was getting boring, but the last several posts are great quality so I guess I’ll add you back to my daily bloglist. You deserve it my friend 🙂

  8. Health and Fitness
    April 20, 2018 | 11:16 am

    I was just seeking this information for some time. After six hours of continuous Googleing, finally I got it in your site. I wonder what is the lack of Google strategy that don’t rank this type of informative websites in top of the list. Normally the top web sites are full of garbage.

  9. Health and Fitness
    April 20, 2018 | 11:42 am

    Hi there, I found your site by way of Google while looking for a similar subject, your website got here up, it appears to be like great. I have bookmarked it in my google bookmarks.

  10. Health and Fitness
    April 20, 2018 | 3:25 pm

    I like this post, enjoyed this one thanks for putting up.

  11. Health and Fitness
    April 20, 2018 | 4:12 pm

    I do trust all of the concepts you’ve presented on your post. They’re really convincing and will definitely work. Nonetheless, the posts are very brief for novices. Could you please extend them a bit from subsequent time? Thank you for the post.

  12. Health and Fitness
    April 20, 2018 | 6:53 pm

    Hi, Neat post. There is a problem along with your web site in web explorer, might test this… IE nonetheless is the market chief and a huge part of folks will leave out your wonderful writing due to this problem.

  13. Health and Fitness
    April 20, 2018 | 7:22 pm

    Hello There. I found your blog using msn. This is an extremely well written article. I will be sure to bookmark it and come back to read more of your useful info. Thanks for the post. I will certainly comeback.

  14. Health and Fitness
    April 20, 2018 | 8:03 pm

    Valuable info. Lucky me I discovered your web site by accident, and I am stunned why this twist of fate didn’t took place in advance! I bookmarked it.

  15. Health and Fitness
    April 20, 2018 | 9:47 pm

    Thank you a bunch for sharing this with all of us you actually know what you are speaking approximately! Bookmarked. Please also talk over with my web site =). We can have a link alternate agreement between us!

  16. Health and Fitness
    April 20, 2018 | 10:30 pm

    I really enjoy reading on this site, it holds fantastic blog posts. “Something unpredictable but in the end it’s right, I hope you have the time of your life.” by Greenday.

  17. Health and Fitness
    April 20, 2018 | 11:28 pm

    You really make it seem so easy with your presentation but I find this matter to be really something which I think I would never understand. It seems too complex and extremely broad for me. I’m looking forward for your next post, I will try to get the hang of it!

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