If you are considering changing your health insurance policy, you should be aware of the alternative of a Health Savings Account (HCA).

Health Savings Accounts started to become available (and legal) in 2004, allowing people with high-deductible insurance policies to set aside tax-free money to fund medical expenses up to the maximum deductible amount.

If you don’t have to use the funds, it rolls over every year. Once you reach age 65, you no longer are required to use it for medical expenses, although you certainly can; you can withdraw funds under the same conditions as a regular IRA.

Although you will be penalized if you use the funds for non-medical expenses prior to age 65, you can use the money for vision care, alternative medicine or treatment and dental care.

For 2008, an individual may fund up to $2,900 tax free. The maximum deductible would be $1100 and the maximum out-of-pocket cost would be $5,600.

For a family, the maximum tax-free contribution is $5,800 with the maximum deductible of $2,200 and the maximum out-of-pocket cost would be $11,200.

Health Savings Accounts are certainly a viable way to shelter income while providing catastrophic insurance coverage in light of the high cost of low-deductible health insurance plans.

For healthy people, it deserves some research. Consult with your insurance agent for all of the details involving this approach to managing your insurance needs.