Essay Sample on Health Savings Account - HSA

Published: 2019-10-16 13:48:09
Essay Sample on Health Savings Account - HSA
Categories: Health and Social Care Money
Pages: 2
Wordcount: 548 words
5 min read

Health savings accounts are just like a personal savings account, the only difference is that the money in them is only used to pay for medical care expenses and the money deposited in this account is not taxable (Mayo Clinic, 2016). The main purpose of coming up with the HSA legislation was to improve health services, minimize the costs in health care and improve on the efficiency in the health care system. Deposits into this account can be made by the account holder, employer or any other individual. In the case where the employer makes the deposits, there are rules that have to be considered that includes the non-discrimination rule that requires the employer to treat each employee equally and fairly.

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Advantages of HSA

As, mentioned earlier, some of the major reasons for legalizing HSA was to better the health sector, the following are its advantages:

HSA is Health saving account is a good idea for health care as it saves most people from using money in their pockets and other individual savings from unexpected health issues (Wong, 2016)

Cash is rolled over from one year to another; unlike other health benefits like flex savings account (FSA), contributions have to be used before its time limit (mostly end of year) or it is lost. This therefore requires a consumer to plan for the exact amount required annually. Since there are no limitations in HSA, the amount in the account increases with time with no maximum limit.

The consumer can invest in the HAS scheme for them to have returns in the future this contributes in the quick growth of the account.

It is of more advantage also for people nearing retirement as it can be used to cover and offset costs of medical care incurred after retirement.

Disadvantages of HSA

Just like any other good thing, HSA too has its shortcomings which include:

A consumer can only use the HSA unless they have a HDPH. The deductibles are quite high for individuals and this may hinder them from seeking medical care.

Consumers are not allowed to withdraw their savings for non-medical use. Incase this happens; consumers under the age of 65 will have to pay taxes and penalties for it. There are no penalties to consumers who are over the age of 65 when they withdraw their savings for non-medical use, but still they are taxed.

There are limitations as to how much one can invest annually into their HSA. First, there has to be a certain amount of money in the HSA for one to be able to invest from it and earn largely, secondly if an individual needs to save more than the required amount, then they will have to use their traditional savings account which is not tax-advantaged

Unless one is not under any payroll, individuals are not allowed to use the funds in HSA to pay health insurance premiums.


HSA has been an added advantage to many health insurance holders and in more than one way, it has helped in the improvement of the health sector.


Health Savings Account (HSA) - Obama care Facts. (2016). Obama care Facts.

Retrieved 23 July 2016, from

Mayo Clinic,. (2016).Health savings accounts: Is an HSA right for you? - Retrieved 22 July 2016, from

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