What can a health savings account do for you?
The National Center for Policy Analysis has an answer:
Health savings accounts (HSAs) were introduced in 2004 and allow individuals to pay for medical services upfront through funds they deposit tax-free into a personal account. A required insurance policy then kicks in for catastrophic expenses. Any unused funds build up from year-to-year and collect interest in the process.
The beauty of HSAs is that they can be used to pay Medicare premiums, out-of-pocket expenses, long-term care insurance premiums, and many long-term care expenses, say researchers. Even better, HSAs can do all of this tax-free. However, if you don’t end up incurring these types of expenses, you can still use your HSA funds for other purposes and pay only regular income tax on your withdrawals after age 65.
The NCPA’s source on this is a policy paper by Roy Ramthun and Matthew Hisrich of the Flint Hills Center for Public Policy. We should be hearing more about HSAs with all the talk about health care reform. Unfortunately, health care “reform” often seems to mean “How can I get someone else to pay for my health care?” Self-reliance doesn’t seem to be in vogue in the country just now.