8 Reasons to Love Your Brooks Health Savings Account
Last updated January 21, 2020
Many people are eager to learn more about health savings accounts (HSAs), which continue to generate buzz as a growing trend in health care coverage. The general assumption is that a financial tool with this much potential must be complex and difficult to understand. However, in reality, HSAs are relatively simple to use and understand once you grasp some core concepts.
Here are eight reasons why we love HSAs and think you will too …
1. HSAs fund health care needs
The HSA is first and foremost designed to fund health care expenses in conjunction with a high deductible health plan (HDHP). An HDHP is a requirement to set up an HSA. The HSA is a savings account that secures pre-tax dollars in a fund for future medical needs, and helps meet the deductible on one’s health insurance plan, should something happen that takes medical expenses beyond what is readily affordable.
2. HSAs utilize pre-tax funds
Contributions to your HSA through Brooks Rehabilitation are set up as pre-tax investments, meaning your taxable income is decreased, so fewer taxes will need to be paid out.
3. HSAs come with significant premium savings
High deductible health plans also come with much lower premiums than a traditional plan. This is especially apparent to someone who pays the premiums all year long but doesn’t actually go to the doctor or utilize medical services very often. For this person, the premium can feel like money out the window. Based on premium savings alone, some HSA consumers see 20 to 40 percent savings each year.
4. HSAs offer expanded coverage options
Unlike typical insurance plans that have a highly negotiated list of medical products or services that are covered, HSAs allow many additional health-related expenses. So doctors’ visits, hospital expenses and prescriptions are covered, but coverage also extends to some dental and vision services, and certain “non-traditional” treatments such as acupuncture and deep tissue massage.
5. HSAs allow negotiating power to secure discounts on medical services
Because an HSA is a “cash” account, it empowers consumers with an option to negotiate pricing on many medical services, which can lead to substantial savings on medical expenses. For example, standard imaging services can vary widely in price depending on location and payment method. An MRI, for example, can cost anywhere from $400 to $1,800 for the exact same service.
6. HSAs are portable
If you switch jobs, your HSA account will follow. And, unlike traditional insurance plans, you won’t lose unused funds in these accounts at the end of the year. You “own” this account and all benefits that come from its good management.
7. HSAs are a powerful tool for retirement investing
Over time, a relatively healthy person or someone who is a decent financial manager can save a good deal of money and investment earnings in an HSA. Consumers who are between the ages of 55 and 65 also have the opportunity to make additional “catch-up” contributions to the fund. Increased access to this fund begins at age 65. The account can continue to be used for medical expenses with no penalties, but withdrawals for other purposes are also possible (after age 65) and often face fewer penalties than withdrawals from an IRA.
8. HSAs create financial incentives for managing health care expenses
There are always unfortunate cases where a catastrophic event occurs and emergency medical services are required that do not allow time to “shop around.” But the majority of medical transactions faced in the course of a lifetime are more predictable. Since the HSA is a consumer-controlled cash account, you’re encouraged to think about whether a particular expense is worth it or if a cheaper alternative, like a generic medication instead of name brand, might work just as well.