A few years ago my wife and I decided to open a Health Savings Account. We were tired of watching the health insurance premiums for our family of four go up every single year. It got to the point where we were paying more than $500 per month and decided to make a change. I’m glad we did because family friends of ours are now paying nearly twice that much for a policy similar to what we had. How ridiculous!

What attracted us to the Health Savings Account (HSA) was the fact that we gained some control over what we pay for health insurance. The first year is a little scary because you start out with nothing in your account, but if you can make it through those first few months then things become easier. It’s probably best to start a plan in the spring as opposed to during cold and flu season.

Basically what we did was moved up to a High Deductible Health Plan (HDHP) because you need at least a $2400 deductible to qualify for an HSA. Then the money you save on your premiums can be redirected into your HSA. There are annual HSA Contribution Limits so you can’t put in more than the guidelines. If you don’t use all of the money in your Health Savings Account by the end of the year it simply rolls over to the next calendar year. This is a nice feature because as your account grows you can continue to raise your deductible and lower your health insurance premiums. We now have a balance of about $6000 in the account so we can comfortably have a $5000 deductible. Once our children are off our plan it should grow even faster because they tend to be sick much more often than my wife and I. This money grows on a tax deferred basis and many providers even offer investment options similar to an IRA.

When you reach age 65 Medicare kicks in so you really don’t need to spend much on health care so at that point the non-medical withdrawal penalties are waived and you can use the money for whatever purpose you desire.

In summary, there are many good reasons to consider a health savings account. Really the only drawback is getting through those first few months without a major health expense. Do more research and consider one today!