By Katherine INTRODUCTION – In the United States, the term “health insurance” is used to refer to any program that pays for medical expenses. This could be private insurance, government-funded social insurance, or social insurance. This usage is also known as “health coverage”, “health care coverage”, “health benefits”, and “medical coverage”. The term can also be used in a technical sense to refer to any type of insurance that offers protection against injury or illness.
The American health insurance industry has seen rapid changes over the past few decades. Indemnity insurance was the most common type of health insurance in America. Fee-for-service is often used to describe indemnity insurance. This is traditional insurance that covers health care services. The provider, usually a hospital or doctor, is paid a fee per service. The consumer-driven health care (CDHC) is an important component of indemnity plans. Individuals and their families can have more control over their health care. They can choose when, how, and what type of care they want.
However, these plans have higher deductibles which the insured must pay out of their own pockets before they can receive insurance money. Health Reimbursement plans (HRAs), Flexible Spending Accounts(FSAs), high-deductible health plans (HDHps), Archer Medical Savings Accountss (MSAs), and Health Savings Accountss (HSAs) are all consumer driven. The Health Savings Accounts, which are the most recent, have seen rapid growth over the past decade.
What is a HEALTH SAVINGS ACCOUNT?
The tax-advantaged HSA (Health Savings Account) is an account that allows taxpayers to save money on medical expenses. The federal income tax is not applicable to funds that are deposited to the account. They can be used at any time to pay qualified medical expenses without federal tax liability.
Another advantage is the rollover of funds from Health Savings Accounts. They accumulate year after year, even if they are not used. The funds can be withdrawn at retirement by employees without tax liability. Federal income taxes are not applicable to withdrawals for qualified expenses or interest earned. The U.S. Treasury Office states that a Health Savings Account can be used as an alternative to traditional insurance. It is a savings product that allows consumers to pay for their healthcare in a different manner.
HSA’s allow you to save tax-free for future qualified medical or retiree expenses as well as pay current health costs. The Health Savings Account aims to improve the efficiency of America’s health care system, and encourage responsible and prudent behavior in regard to their health care needs. It is a consumer-driven health care plan.