A recent proposal from the Senate Committee on Finance recommends eliminating flexible spending accounts (FSAs) as a way to help fund costs for health care reform efforts.  If enacted, this proposal would negatively affect many Americans who rely on FSAs to manage and pay for their health care costs not covered by insurance…in essence an increase in taxes at a time when many can least afford it.

According to the Daily Kos, “The Joint Committee on Taxation told Senate leaders recently they could collect $68.6 billion over 10 years by abolishing the accounts, along with separate ones in which employers contribute money for workers to use for health care expenses. Eliminating both types of accounts would pay for four percent or more of the estimated $1 trillion to $1.5 trillion cost of expanding coverage to the 46 million uninsured.” (more…)

In response to escalating growth in health care costs, more and more employers are exploring the viability of consumer-driven health plans (CDHP).  The basic difference with these plans and traditional insurance plans is these types of plans typically shift health care decision-making responsibilities to employees and encourage them to actively participate in their health care management.

A critical component to these consumer-driven health plans is the medical savings account (MSA), or healthcare savings account as it is commonly referred to. These medical savings accounts are  savings plans whereby pre-tax dollars are used for health care expenses, providing an incentive for reduced use of health care services. (more…)

–Submitted by Susan Smith, HSA Insurance super fan

Health Savings Account: What is it?

A health savings account (HSA) is a medical savings account for individuals enrolled in a High Deductible Health Plan (HDHP). Monies contributed to an HSA insurance plan are not taxed at the time of deposit. But unlike a flexible spending account (FSA) which returns unspent funds to the employer at the end of the year, HSA funds roll over and continue to accumulate year after year. Heath Savings Accounts are owned by the individual and are used to pay for qualified medical expenses without incurring federal tax liability. Withdrawals for non-medical expenses, on the other hand, are treated similar to those of an IRA…a tax advantage if taken after retirement age but penalties incurred if withdrawn earlier. (more…)