Health Savings Accounts

The health system in Australia is widely regarded as one of the world’s best, with most citizens being able to access high quality health care at an affordable cost. Due to factors such as increased longevity and technological advancements in the health industry, analysts are noting an increase in costs for the more mature population. The percentage of those over the age of fifty-five who are considered more likely to begin experiencing age related medical problems is growing rapidly. This will cause a financial strain in both the public and private sector. There is no indication that this trend will decrease or level off in the near future; subsequently, it will affect the piggy bank of recipients who receive health care benefits.

A health savings account is a developing trend to cover additional medical expenses in Australia. It operates much like a super in that the money stored in this account is tax free. As an account holder, you even have the option to pay income taxes using this money. Health savings accounts are meant to compliment, not replace an insurance policy. With the rising costs of healthcare, the Australian Medical Association (AMA) hails the health savings accounts, believing it to be a sensible way to supplement the existing health insurance system.

With a health savings account, individuals have the opportunity to invest in supplemental costs associated with their health care. The money saved can be accumulated from the following sources: with tax money, personal contributions (known as ‘gap’ funds) and premiums offered through private policies. Funds accumulated in the health savings account can be withdrawn at any time via check or debit card to medical expenses not covered by primary insurance; moreover; the money used is tax deductible and interest free until the age of 65.

Health Savings Accounts are a responsible investment for individuals as it helps prepare for unforeseen health expenses by saving money before it is accounted for tax purposes, leaving a growing lump sum to deal with the medical emergencies that could occur to any of us. Like a super, both employers and individuals can have the option of contributing to one of these accounts on an income tax exempt basis. The purpose of the health savings account has two primary roles. First, it benefits those with regular monthly or unexpected medical expenses. Secondly, the account will allow individuals the option of using a private insurance fund or one in conjunction with their super. And like a super, it’s an investment account for some. To others, it is a retirement account. Drawing even more similarities to a super, it should be noted there are certain conditions attached to how these savings are accessed and used.

Citizens under the age of 65 have the opportunity to qualify for a health savings account; however, an individuals deductible must be at least $1,100 or greater. For a family plan, the deductible has to be at least $2,200. When your out of pocket medical expenses are this high, your policy is considered to have a “high deductible.” Should a medical emergency arise having at least the amount of your deductible in a health savings account would lessen the financial burden of having to come up with a quick lump sum of cash.

If the money in your health savings account not be able to cover doctor or hospital debts, you have the opportunity to put your high deductible policy into effect and cover any accumulated medical expenses Using health savings accounts will revolutionize the industry. Those who were only able to afford high deductible plans (and consequently more likely to find themselves buried in medical bills) can now set aside money to supplement their deductible. In additional to lessening the financial burden, the health savings plan is much more flexible in terms of where you spend. While some policies dictate an approved network of doctors, the health savings account gives you the liberty to see the doctor of your choice.

Because a health savings account is not an actual policy, especially due to their not offering full cover from the beginning of the savings period, they can easily be dismissed as an impractical expense. But those who have felt first hand the tightening belt of the healthcare system may in fact want to explore the need for a health savings account. They can help people to deal with their increasing medical needs in old age if they begin contributing towards an account early enough. The Australian Medical Association emphasizes that as the taxpaying population shrinks relative to the overall population, and non tax-payers become increasingly of greater age, instead of having to return to the working generation to pay for the increase in health provision, it can be more easily paid by the generation that will use it.

One of the greatest advantages of the health savings scheme is that it will grow as the Australian population becomes older, and therefore it will much more sustainable in the long term. The Australian Medical Association also noted that the increased use of health savings accounts will make greater resources available to the government for future use in health care applications. Later on down the road, health savings accounts could be run by health insurance providers on behalf of an individual, as a partial aspect of their health coverage.

As an added benefit, a Health Savings Accounts balance can be applied to medical payment claims and thus can be tailored specifically to make this process much simpler and more efficient. Whether you have monthly out of pocket expenses or are preparing for a surprise medical emergency, health savings accounts are a responsible move when it comes to handling medical expenses.