Health Savings Accounts save money

If you were to spend every penny on health insurance out of your pocket, two things would happen. First, you'd be more interested in your medical treatment, questioning the cost and necessity for every procedure. And, second, you'd take better care of yourself, knowing that being overweight, or smoking, or not exercising is bound to be very costly to your own financial future, as additional health care is going to hit you in the pocketbook.

Health Savings Accounts let people keep the money they don't spend on medical care -- in an account that grows tax-deferred every year to pay for future medical expenses. And the money they do spend for medical expenses is paid out on a pre-tax basis.

The account is combined with a high-deductible health plan that costs less than traditional health insurance policies, but covers major medical expenses. Employers may use some of that savings to contribute to workers' HSAs.

In 2007, individuals can set aside a tax-deductible contribution to the HSA of up to $2,850, or $5,650 for a family.