INTRODUCTON – The term “health insurance” is commonly used in the United States to describe any program that helps pay for medical expenses, whether or not through privately purchased insurance, social insurance or a non-insurance social welfare program funded by the government. Synonyms for this usage include “health coverage, ” “health care coverage” plus “health benefits” and “medical insurance policy. ” In a more technical sense, the term is used to describe any form of insurance plan that provides protection against injury or even illness.
In America, the health insurance business has changed rapidly during the last few years. In the 1970’s most people who experienced health insurance had indemnity insurance. Indemnity insurance is often called fee-forservice. It is the traditional health insurance in which the medical provider (usually a doctor or hospital) is paid a fee for each service offered to the patient covered under the policy. An important category associated with the indemnity plans is that of consumer driven medical care (CDHC). Consumer-directed health plans allow individuals and families to have higher control over their health care, including whenever and how they access care, what kinds of care they receive and how much they spend on health care services.
These types of plans are however associated with increased deductibles that the insured have to pay using their pocket before they can claim insurance money. Consumer driven health care plans consist of Health Reimbursement Plans (HRAs), Versatile Spending Accounts (FSAs), high insurance deductible health plans (HDHps), Archer Healthcare Savings Accounts (MSAs) and Wellness Savings Accounts (HSAs). Of these, the Health Savings Accounts are the most recent found witnessed rapid growth during the last decade.
WHAT IS A HEALTH SAVINGS ACCOUNT?
A Health Savings Account (HSA) is a tax-advantaged healthcare savings account available to taxpayers in the United States. The particular funds contributed to the account are certainly not subject to federal income tax at the time of deposit.
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These may be used to pay for qualified medical expenses at any time without federal taxes liability.
Another feature is that the funds contributed to Health Savings Account roll over and accumulate year over season if not spent. These can be withdrawn by the employees at the time of retirement with no tax liabilities. Withdrawals for experienced expenses and interest earned are also not subject to federal income taxes. According to the U. S. Treasury Office, ‘A Health Savings Account is an alternative to traditional health insurance; it is a savings product that provides a different way for consumers to pay for their health care.
HSA’s enable you to pay for present health expenses and save intended for future qualified medical and retiree health expenses on a tax-free basis. ‘ Thus the Health Savings Account is an work to increase the efficiency of the American health care system and to encourage individuals to be more responsible and prudent in the direction of their health care needs. It falls in the category of consumer driven health care insurance options.
Origin of Health Savings Account
The Savings Account was established under the Medicare Prescription Drug, Improvement, and Modernization Act passed by the U. H. Congress in June 2003, with the Senate in July 2003 and signed by President Bush on December 8, 2003.
The following individuals are eligible to open a Health Savings Account –
– Those people who are covered by a High Deductible Health Plan (HDHP).
– Those not included in other health insurance plans.
– Those not enrolled in Medicare4.
Also there are no income limits on which may contribute to an HAS and there is no requirement of having earned earnings to contribute to an HAS. However HAS’s can’t be set up by those people who are dependent on someone else’s tax return. Furthermore HSA’s cannot be set up independently by children.