Consumer-Driven Health Care

• The health savings account, or HSA, is part of the drive toward consumer-driven health care. Many lawmakers and insurance experts feel that putting consumers in charge of their health care spending will mean that those consumers ultimately make smarter health care spending decisions. Those experts reason that since the owners of health savings accounts are working with their own money they will be more careful how they spend it, as opposed to what happens when they are spending the insurance company's money. The tax savings and other advantages associated with heath savings accounts are designed to encourage more responsible health care spending and decision-making.
  
  

High Deductible Health Plan

• A health savings account can be a good deal for consumers, but not everyone can open one. In order to open a new health savings account or contribute to an existing one, you must already have a high deductible health plan, or HDHP, in place. Not every health insurance plan qualifies as an HDHP, so consumers should check with their human resources department or insurance broker to make sure their current plans qualify. If you do not currently have an HDHP, you might be able to save money on premiums by switching from your current plan. You can then take those premium savings and use them to fund the HSA with enough money to cover the cost of the higher deductible.
  
  

Annual Contribution Limits

• The IRS sets the contribution limits for HSA plans, reviewing those limits each year and raising them when circumstances warrant. Before you contribute to your current HSA or establish a new one, you need to first check the contribution limits. For 2011, the limit for an individual HSA is $3,050, while the limit for a family plan HSA is $6,150.
  
  

Tax Deduction

• One of the biggest advantages of a health savings account is that the money you contribute is deductible when you file your tax return. Depending on your tax bracket and your tax situation, you might be able to save a considerable amount of money simply by opening a health savings account and contributing the maximum amount. And since the money in your health savings account rolls over from year to year, you can continue to contribute more money each year, allowing those funds to accumulate and save you even more on your tax bill.