Cutting Costs

Health savings plans are not only a popular idea for the employee, but the employer as well. Paying for health care is costly, no matter the side you’re on. A bill that President Bush signed in 2003 made it possible for health some of the health care costs to be alleviated. The health savings plans are especially admired by small business owners and the self employed. With the rising costs of health insurance, these accounts help cut down the financial burden as well as provide a tax break of sorts.

Health savings plans are accounts set up with the sole intention of being used for medical expenditures. A portion of your check is taken out before taxes and set into the health savings account, sometimes called a health reimbursement arrangement. Since it is taken out before taxes, when the money is withdrawn for medical reimbursement no taxes are put on it, and when April 15 rolls around this money is not taxable income. A recent study showed that a self employed individual pays almost $12,000 a year for full coverage health insurance. On the other hand, those who work for larger companies and have high deductibles benefit from the health savings accounts. The money in their account can be put toward their deductible, cutting their health costs even further as the premiums of high deductible insurance plans is comparatively low. Another plus is that any funds left in the account at the end of the year is able to roll over to the next year.