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Two parts associated with a *Health Savings Accounts

1st.: Purchase a Health Insurance plan which is: *HSA-Compatible
2nd: Open a *HSA Account with a Financial Institution

Health Savings Accounts are a new option for health insurance and they have two parts. The first part is a health insurance policy that covers large hospital bills. The second part of the Health Savings Account is an investment account or retirement account from which you can withdraw money tax-free for medical care. Otherwise, the money accumulates with tax-free interest until retirement, when you can withdraw for any purpose and pay normal income taxes.

Q: Why should I have a Health Saving Account for me or my family?
A: If you are tired of sending hundreds and hundreds of dollars each month to your health insurance company, and would prefer to keep a big chunk of that money for yourself to spend on health expenses or save it for the future, then you need to look into a Health Savings Account

Q: What other advantages do Health Savings Accounts have over traditional health insurance?
A: If you are unemployed or laid off and are collecting State or Federal unemployment insurance, then you can use funds from your Health Savings Account to pay for your health insurance premiums and for your routine health expenses -- all tax-free. Another advantage is that you can spend tax-free money out of your Health Savings Account for long term care insurance. For more information about the long-term care advantages to HSAs, see Table C in HSA Road Rules, which can be downloaded from the Q & A section of this site.

Q: What happens to my Health Savings Account funds when I die? Can I leave it to my children?
A: If the named beneficiary in your will is your spouse, the spouse continues to access the Health Savings Accounts funds tax-free for medical expenses and pay income taxes on any non-medical expense. If your beneficiary is anyone else, then they will generally owe income taxes when the assets move to them, but no penalty.