Health Savings Accounts Analysis - Essay Example

Nevertheless, all patients must pay small and medium medical expenses on their own that includes all the deductibles below $1,000 for singles and $2,000 for families. However, for major illnesses and high-cost care high deductibles that are more than $1,000 apply. Most conveniently, the Health Savings Accounts allows patients to pay these expenses either out of pocket or from the HAS savings account (Petigara & Anderson, 2008). Additionally, where the medical care does not exhaust the Health Savings Accounts, the savings proceed to the next year and all earnings from the savings are exempt from federal taxes. In addition, all contributions to Health Savings Accounts are exempt from federal income taxes (Getzen, 2010). Most, significant is the fact that either the person or employer can finance the Health Savings Accounts with amounts less than or equal to the deductible.

However, the contribution by employer or government is limited to a fixed dollar amount. Indeed Health Savings Accounts have distinct characteristics that include providing healthcare to the uninsured to pay out-of-pocket costs. Uniquely, HSA funds roll over from year-to-year and employees can confidently take the account with them upon changing employers (America's Health Insurance Plans, 2012). In addition, the account provides a comprehensive health insurance plan and guarantees tax-deferred funds for qualified medical expenses. Similarly, the account guarantees quality medical care for patients of all health conditions, different ages, and socioeconomic backgrounds. Furthermore, the account enjoys tax benefits for withdrawals and high-deductible plans. Additionally, all deposits to the HSA accrue by April 15 and are usable for long-term-care insurance premiums.

Indeed, the uniqueness of the Health Savings Accounts allows for differences with other traditional kinds of health insurance. For example, unlike other traditional kinds of health insurance that allow the use of deposits for health care premiums, HSA only allows long-term-care insurance premiums. Additionally, other health insurance plans do not allow for funds to roll over from year to year as HSA does. At the same time, in other health insurance plans savings stay with the company if the employee changes jobs unlike in HSA where employees take s the savings with them to the new employer. Moreover, unlike in the HSA where the employee, employer and the government are at liberty to finance the account, other health insurance plans restrict funding to employers only. At the same time, where HSA limits health care services to high-deductible plans, other traditional health insurance plans have no limitations. Most significantly while HSA is for all health conditions, different ages, and socioeconomic backgrounds, some traditional health insurance plans like Medical savings accounts limit their coverage to self-employed persons. Finally, where withdrawals and high-deductible plans enjoy tax benefits in HSA (Getzen, 2010), other health insurance plans do not have this advantage.

As such, HSA attracted various pros and cons about economic principles and effectiveness. Notably, HSA allows consumers to enjoy tax benefits on contributions and withdrawals. Indeed, earnings, interest, and dividends are exempt from tax. This is significant in allowing earnings to earnings to gain interest on a tax-benefit platform. More so, HSA has no limitations to contributors and thus its affordability (Bierbower, 2007). It is equally convenient to the aged who can make up with marginal contributions until they qualify for Medicare. Moreover, there is no limitation as to how much one can accumulate in the account. Assuredly, the unexploited earnings can roll over to the next year thus allowing ageing employees to use it as a retirement plan with immense tax benefits. Indeed, one can save more in HSA than in Individual Retirement Account. Most important is the fact that there are no time limits to the spending of money in the account. Therefore, where one cannot exploit all the earnings on healthcare costs, you can roll it to subsequent years for future healthcare or other reasons after retirement. HSA allows a patient to visit a doctor at his convenience and covers almost all medical expenses that include costs of long-term care, opticians, cosmetic surgery, medical doctors, funeral expenses, dentists, prescriptions, and Medicare HMO insurance premiums.

Nevertheless, HSA has some cons especially because only the highly paid and the reasonably healthy can effectively benefit from the account. Patients who frequent health facilities with low medical expenses cannot benefit from this plan, as they are required to pay for themselves medical expenses below $ 1,000 for singles and $2,000 for families. Additionally, subject to the tax benefits and capacity to save huge amounts of money, wealthy Americans can abuse HSA by using it as a tax shelter. Most significantly, HSA does not accommodate preventive treatment, which later on advances to complicated health status that is very expensive to handle (Bierbower, 2007).