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What is a health savings account? How & where can you open one?

What is a health savings account? How & where can you open one?

What is a health savings account? How & where can you open one?
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By CNBCTV18.com Mar 30, 2022 5:25:25 PM IST (Updated)

A health savings account or HSA can earn you an interest of 5% and cover all pre- and post-hospitalisation charges. IDFC FIRST Bank does not require pre-policy medical examination but one must be 21-55 years old to be eligible for its HSA.

Rising healthcare costs, especially during the COVID-19 pandemic, has impacted millions of families in India. Although health insurance plans provide respite to some extent, patients still end up spending a large amount on pre- and post-hospitalisation expenses. A health savings account (HSA) is a special financial instrument that can tackle this problem. It is a new concept in the country and only a few institutions are offering HSAs.

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What is a health savings account?

An HSA is a unique savings account that can be used to pay for medical expenses including the ones that are not covered by a basic health insurance plan. It acts like a normal savings account where people can deposit money and use it for health-related expenditure.

This special savings account typically offers better interest rates than regular savings account. An HSA can be combined with a health insurance plan as well.  Customers can withdraw money from their HSA anytime for health-related expenditure. A health savings account may provide tax deductions and tax-free interest as well.

Which banks are offering HSA in India?

Currently, IDFC FIRST Bank offers a Health FIRST savings account that provides a 5 percent interest and an option of Rs 10 lakh health insurance cover with premiums starting at Rs 3,750 per annum without any pre-policy medical examination.

The account covers all pre-hospitalisation charges for 30 days and post-hospitalisation charges for 60 days along with day care treatment. With a Health FIRST savings Account of the IDFC FIRST bank, customers also get a VISA Signature debit card that provides additional payment offers.

A minimum balance of Rs 25,000 must be maintained in the account. The HSA can be opened via online application as well as physical application. Customers will need to produce required documentation like PAN Card, ID/Address proof, photograph, etc.

FEDO a Bengaluru-based startup is also providing early access to HSA account plan. FEDO provides recommendations on a combination of healthcare financing options, including insurance products and investment options. There is no minimum amount, but the amount will be based on the certain parameters like health status of the individual, FEDO score, CIBIL score, etc.

FEDO will also provide a smart credit card with the HSA. The entire process for applying for an HSA with FEDO is digital and accessible via mobile app, via their website and internet banking.

Who are eligible?

All individuals who are eligible to open a bank account in financial institutions can open a health savings account with FEDO. For IDFC FIRST Bank’s HSA, an individual must be an Indian citizen, and be 21-55 years old at the time of application.

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