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What is a Health Savings Account Insurance Plan?

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  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 17 March 2020
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A health savings account insurance plan is a type of medical insurance account. A person may choose a health savings account insurance plan when he has high-deductible medical insurance. He deposits pre-tax money into a health savings account to pay for medical expenses up to the current amount of his deductible. This way, the insurance holder has money available to pay for the medical expenses he is responsible for out of his own pocket.

Often, health insurance plans include deductibles. A deductible is an amount of money an insurance plan holder has to pay for medical expenses out of his own pocket. For example, a person may have a health insurance plan that includes a deductible of $5,000 US Dollars (USD). In such a case, he has to pay the first $5,000 USD of his annual medical expenses before his insurance will cover his medical care costs. To make meeting these expenses easier, a person may sign up for a health savings account.

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With a health savings account insurance plan, a person can usually save part of his income toward medical expenses that his insurance will not cover. The money that is deposited into a savings account is usually tax deductible, which means a person can save money by choosing to open this type of account rather than simply putting medical expense money into a regular savings account. Additionally, health savings account deposits usually earn interest, which means a person can gradually accumulate more money for use toward his medical expenses.

When a person opens a health savings account insurance plan, he can accumulate a large amount of money over time. With this type of account, a person is usually permitted to roll over unused money each year. This is in contrast to a similar type of account, which is called a flexible spending account. A flexible spending account does not usually allow the rollover of funds. Instead, a person may lose unused money that is part of a flexible spending account.

There are rules that govern how much money a person can contribute to health savings account insurance each year. Usually, individuals with families can contribute more than a single person. A person who has this type of account is also subject to rules that govern how the money can be spent. An individual can only use this type of account to pay for qualifying medical treatments, examinations, procedures, and medical consultations.

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