Health Savings vs. Health Insurance Policy

Saving money, especially for medical emergencies is a great thing. In fact, many people actually do this for obvious reasons. When a medical emergency comes along unasked for, you need money on your hands to deal with it. If you don’t have adequate cash on hand to meet the emergency, you’ll have to borrow money, often after giving valuable security. Taking a loan is not just risky, but shall set your financial planning back by years. 

Thus, if you really want to be ready to mean medical emergencies, you can’t beat a health insurance policy. The benefits here are much higher.

Mediclaim or health insurance is one of the most popular insurance products, right after life insurance. It is more important for those who don’t have their own home or vehicle, but have good health. In countries like the USA, there is one more type of health care product: the health savings account. In India, this is a new concept which shall take time for people to understand and trust. 

So out of the two, which one should you choose: health savings account or health insurance plan?

Here are the criteria: 

1. Money movement:  In the case of a health savings account, the money for medical emergencies remains in the account. There are no benefits like investment. But in health insurance plans, your money is invested, which brings you earnings in the form of interest. Besides, there are several benefits and cool features in case of health insurance plans. You can get a stable income of 8% interest.
   

2. Taxation: If you save money in your bank account for medical emergencies, you’ll be taxed. This is true for both health insurance plans and health savings accounts. In the case of health insurance, you may be able to get tax deductions.

3. Convenience and stability: Health insurance plans require you to invest or give premiums after periodic intervals. You can give after 6 months, 6 months or once a year just as you like. This fosters the habit of saving money. In case of health savings, there is no such need. Thus, you may well use the money for other needs instead of for medical emergencies.

4. Amount accessible: The amount you get if you put your money in health insurance plans is much larger than your original investment. In the case of a bank account though, you can’t save enough.

5. Utility of savings: One of the biggest downsides of health insurance plans is that there are limits of the type of disease or medical conditions you can spend all the money on. In any plan, there are exclusions. But if you save money in your bank account, you can use it for anything you want! 

6. Cashless benefit: Mediclaim has many benefits. For instance, you can get a patient admitted to a hospital in case of certain medical emergencies without having to pay before admission. There are no such benefits in case of savings accounts.

Thus, as we can see, health insurance is better.
However, how about the new product of health savings accounts? How does that compare to health insurance? Let’s see!  

Thus, health insurance plans are still better.