Disadvantages of Health Savings Accounts
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Disadvantages of Health Savings Accounts
Health savings accounts have some disadvantages.
Things To Know
- Learn the potential disadvantages and inconveniences of health savings accounts. For example, you must switch over to an HSA-qualified insurance plan.
Change
You must switch to HSA-qualified insurance from traditional insurance. Sometimes this means you must change insurance carriers as well.
Insecurity
Switching from traditional first-dollar coverage makes many people uncomfortable. HSA-qualified plans are relatively new to many people, and they have high deductibles.
Other coverage
You may be ineligible to contribute to an HSA if you or a family member has other insurance coverage that is not HSA-qualified, or has a flexible spending account or health reimbursement account through their employment.
Control
Some people prefer to have a third party (e.g., employer, insurance company) manage their health coverage for them. Employers and insurance companies are able to negotiate discounts for services and help us navigate the health care system in unique ways.
Emergencies
When you have an urgent situation or emergency, it is inconvenient and sometimes impractical to consider "comparison shopping." Thankfully, most health care is provided in non-emergency situations.
Information
Sometimes it is difficult to get good information on health care prices and quality of services so you can comparison shop for good value in health care. Fortunately, better information is becoming available every day.
Tax filing
You must file an income tax return to take advantage of all the benefits HSAs offer. Lower-income individuals and families may not realize all the savings of HSAs if they pay no income taxes. However, they can still save on FICA taxes and other taxes by paying for out-of-pocket expenses with funds from their HSA.