However, you are willing to pay the expenses for less serious medical services. This is why the government approved in January 2004, the Health Savings Account*.

   What is an HSA? An HSA is a federal tax-exempt savings account set up at a financial institution to save money exclusively for payment of qualified medical expenses. Combined with a high-deductible health plan (HDHP) HSA's may be the answer to your health plan needs.

   What is an HDHP? A high-deductible health plan allows the insured to pay lower premiums and cover more out-of-pocket expenses until the annual deductible is met. When the individual or family annual deductible is met, the insurance plan pays eligible benefits for the insured. The HDHP's also have maximum limits on the annual out-of-pocket amounts for covered expenses. The amounts paid to meet the deductible are applied to the maximum out-of-pocket amounts. HDHP's must meet federal guidelines. Both deductible and out-of-pocket maximum amounts are determined by the federal government, and these amounts follow the Department of Labor's Consumer Price Index.

   Here's how an HSA works: When an HSA is used together with an HDHP, health care expense dollars are split between health insurance and the HSA. The HSA owner decides the amount to deposit into the HSA. At the end of the year, any money that has not been used can remain in the HSA for the following years' medical expenses. Another advantage for consumers, HSA's are tax deductible up to allowable limits. The amount of HSA money spent on qualified medical expenses can be excluded on tax returns.

* HSA's are not insurance.