Health Savings Accounts.

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During 2004 legislation was passed which allowed for a special class of Health Savings Account, the HSA, which could be set up in conjunction with the purchase of a qualified High Deductible Health Plan (HDHP). The goal was to put consumers back in control of Medical expenses while providing insurance products that would cover high unexpected bills. The HSA + HDHP is a good way to go for individual and family plan purchasers, especially if you're overall health is relatively good.

Essentially, you purchase a plan with a high deductible and deposit the premium you save in a qualified savings account. The beauty of the HSA is that it's tax deferred when you put money in, and tax exempt if you use the money for qualified purposes. I repeat: When you use the money you save for qualified medical purposes you never have to pay taxes on the money or on any earnings the money may have accumulated - this is huge! HSA Bank has set up an excellent web site to explain the intricacies of HSA's and HDHP's in the simplest possible terms. Click on the link below to go this educational web site.

Actuaries at the Centers for Medicare and Medicaid Services calculate that national health expenditures grew from 7.0 percent of GDP in 1970 to 15.3 percent in 2003. And, they forecast that medical expenditures will reach 18.7 percent of GDP by 2013. It's no longer possible for our government, or for individuals, to ignore these rising costs.

Insurance companies only want to insure healthy people. And, they are becoming increasingly selective in their definition of healthy. Rising premiums and frequent declines are just a reflection of the precipitous rise in healthcare costs.

My lead article this month, Health Savings Accounts, discusses new legislation designed to move the cost and control of medical expenses closer to the consumer. This legislation reflects our government's concern for rising healthcare costs, and presents an interesting financial alternative for many.