A very popular Health insurance plan for healthy young people is the High Deductible Health Plan. Its only problem is high deductibles and that is where the Health Savings Accounts come into play.

A Health Savings Account, or HSA, is a tax advantaged savings plan that is designed to set aside money for the payment of certain medical expenses including deductibles and coinsurance payments. In order to enroll in a Health Savings Account, you must be first enrolled in a High Deductible Health Plan.

A High Deductible Health Plan, or HDHP, is what is called a consumer driven health plan. It features very low premiums which makes it very affordable, but also has very high deductibles. What does this combination mean? What it means is that the Insurance is designed for catastrophic medical conditions. Routine medical conditions will be paid by the insured because of the high deductibles.

The Health Savings Account can provide money to use to pay the high deductibles. The accounts can be set up by individuals or by an employer. Employers who offer Health Savings Accounts as part of their benefit package can usually arrange to have the contributions to the plan made on a pre-tax basis. When this is not possible, the contributions are considered as deductible income when taxes are filed.

Like all other plans that allow tax breaks, the Health Savings Accounts are rather strictly controlled by the Internal Revenue Service. Employers are not allowed to discriminate in matched contributions. If they offer them to one employee, they must offer them to all other employees who are signed up in the High Deductible plans. Currently, the maximum yearly contributions to the Accounts are $2,700 yearly for a single person and $5,650 for a married couple.

The money inside the account may be invested in a manner similar to an Individual Retirement Plan and the earnings are not subject to taxation until they are withdrawn. There is no tax or penalty paid on withdrawals that are made to pay medical expenses. Early withdrawals for non-medical purposes are subject to tax and a 10% penalty. When a person reaches the age of 65, withdrawals may be made, free of tax or penalty, for any purpose. The Health Savings Accounts are the subject of much debate within the Insurance industry. Their detractors claim they will cause overall health care costs to rise. Their supporters say this in not true. In a time of rising Health Insurance costs, they are certainly a boon to many individuals who recognize the importance of Insurance in their overall financial planning.

Get Quotes on California health insurance plans at UFCAmerica.com.