If you don’t want to go into debt or even go bankrupt with an expensive medical bill to pay, even with the help of health insurance, it’s best to have an HSA
A health savings account (HSA) becomes essential for many families, especially since without it they could end up in debt with credit cards or loans to pay for unexpected medical expenses. Hence, if you are interested in how you can set up an HSA, we will explain it to you in the following lines.
Health Savings Accounts ( HSAs ) are investment accounts with funds that can only be used for health expenses. Some compare them to individual retirement accounts ( IRA ), because they have a limit on annual contributions, although if not taken care of, the money continues to be invested as in these so that you keep those funds until the moment an emergency arises medical or other health-related expenses.
To qualify for an HSA you must have a high deductible health plan (HDHP). Higher deductibles translate to a lower premium for insurance coverage, since the insurance company is less likely to pay claims in any given year. As with any insurance, a lower risk for the insurer is reflected in lower premiums for the client.
Keep in mind that while most health insurers offer high-deductible policies, not all of these policies qualify to be paired with HSAs. The insurer must agree to federal reporting requirements and comply with state insurance laws and other applicable requirements.
How to set up an HSA account
Virtually all major health insurers offer high-deductible health plans between their group and individual policies. To complement these, many insurers also offer in-house HSA administrative services.
Brokerage accounts can also help you set up an HSA account. If you don’t already have one, reach out to one of these administrators to see if they can help you get an HSA as well.
Among the recommendations to open an HSA account when you find a manager are:
- Get insurance quote. List the main health insurers in your state. Compare prices and choose the health insurance policy that best suits your needs. Many insurers have an affiliate or subsidiary company with which they can administer an HSA when you purchase your health insurance.
- Select an HSA administrator. If you don’t want to use a servicer from an insurance company, you can approach major banks or financial institutions that offer HSAs.
- Deposit and invest your funds. From the moment you find your ideal HSA account, the administrator should give you instructions on how you can make your deposits and withdrawals from the fund balance. He should also explain the process by which you can change investments. In most cases you receive a debit card linked to your account.
Opening an HSA account incurs fees like any other financial product. You can incur an initial cost for the opening. They also have annual maintenance fees while the account is open and possibly commissions each time you buy or sell assets within the HSA. These fees can be compared to the same fees you would pay on an IRA or 401(k) retirement account.
According to Money Crashers, many of the best HSA managers charge fees of less than $3 per month, and some waive those fees if you maintain a minimum balance.