HSA Health Insurance

Health Savings Account (HSA) is defined as a medical savings account made available in the United States of America for the benefit of taxpayers who are also enrolled in a High Deductible Health Plan (HDHP). It is considered as an alternative to comprehensive health insurance such as a flexible spending account (FSA).  HSA benefits both the employer and the employee by providing lesser health insurance costs. It provides the society other means of paying their health care. The funds involve are not subject to federal income tax and therefore allow the people to save for possible future medical expenses, as well as for retiree health expenses.

Small businesses are the target and main focus of the introduction of HSA. The government of the United States developed means of helping small businesses. Large companies are estimated to spend about 6, 000 USD annually for each employee. According to some studies and surveys conducted by the Kaiser Family Institute together with The National Association of Health Underwriters, every year approximately 15 percent has increased from the budget of these large companies within 5 years to 700 USD monthly for the health care benefits of each employee. This pointed the need for developing alternative ways of providing health care benefits to employees without spending too much amount.

HSA is, in some way, similar with MSA or medical savings account. The latter has been introduced first prior to HSA, with the same intend or purpose. The main difference between HSA and other medical savings account is the fact that any employers, regardless of how big or small their company are, can offer an HSA account and health care plans to their employees. Medical savings account is only applicable to those who are self-employed, or has fewer employees.

Some of the benefits of HSA include the mere fact that it is used in combination with a high-deductible health plan, funds or contributions as well as payments for qualified medical expenses are free from tax since the employee is allowed to pay in a pretax basis. Accumulated interest is also tax-free. HSA also aids and facilitates employees to become better health care consumers. In HSA, savings are certainly owned by the employee himself and can therefore, move from one employer to another.

Despite its many benefits, HSA health insurance premiums still faces a number of criticisms mainly from consumer organizations like Consumers Union, and medical organizations like the American Public Health Association. According to these organizations, the only people who will receive the benefits of HSA are who have no health problems, physically-fit, healthy and younger employees. As quoted by a Stanford economist Victor Fuchs, "The main effect of putting more of it on the consumer is to reduce the social redistributive element of insurance."