Health Savings Accounts Have Pros and Cons for Chicago Insurance Customers

It's enough that we have to worry about our IRAs and 401ks. But what about these new HSAs?

Believe or not, insurance companies aren't trying to make our heads spin. Health Savings Accounts - savings funds where we can stash money for potential medical-related expenses - might be the ticket to affordable health insurance for many Americans, according to Chicago bankruptcy attorneys. Just how much you'll benefit from an HSA depends on your unique financial situation.

On the one hand, HSAs offer a tax-free way to save up for medical-related costs. Not only that, but they can contribute to your retirement. If, after you retire, you can afford to pay your medical bills without dipping into your savings, you can choose to withdraw from your HSA for any purpose, penalty-free (though at that point, you will owe taxes). Another benefit: they're usually coupled with lower monthly premiums. On the other hand, HSAs are also packaged with relatively high deductibles. For instance, a $4,000 deductible means you'll have to pay out-of-pocket for most medical costs - including prescriptions and doctor's visits - until you exceed $4,000 for the year.

So what does it all mean for you? If your medical bills are likely to be well under or over the deductible, a health savings account might be for you. For example, maybe you're young and healthy. If you take good care of yourself, chances are you won't need much medical care - so you'll take advantage of lower premiums, while paying few out of pocket expenses. However, you'll need to make a point of funding that HSA, because if something catastrophic happens - let's say you end up in the emergency room overnight - you'll have to pay everything until the deductible is reached. Conversely, if you've got a serious (read: expensive) medical condition, you might also benefit, since you're sure to exceed the deductible. Once your deductible is reached, you stop paying - whereas you would still be required to cough up co-payments under a traditional plan.

Ultimately, health plans are almost as different as the people who rely on them. Talk to your employer, talk to your insurance provider - do what you need to do to add up your costs and determine the coverage that best suits your financial needs. But what's most important in the end is that you have coverage, period. If you're so saddled with debt that you can't afford your premium, there is an alternative. Bankruptcy can lower and even eliminate many debts so you can afford to pay the bills now and into the future. Our Chicago bankruptcy attorneys can identify a bankruptcy plan that's right for your family with a free personal debt analysis.

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