Health Savings Accounts (HSAs) have been around since 2004 and grew out of the Archer Medical Savings Account pilot. Initially, there weren’t a lot of trustees that handled HSAs. But NOW, four years later, since people have figured out there is money to be made, most banks and more credit unions are offering them as well as private companies focusing primarily on administering health savings accounts.
In order to be eligible to open an HSA, you first have to purchase a qualified high deductible health plan. Not just any high deductible plan is eligible. Basically when you look for these plans, they will be identified as ‘HSA eligible’ or ‘HSA compatible.’ Generally the only benefits you will have available prior to meeting the deductible are preventive. But check the plan outline, some don’t (most do).
You will have a deductible to meet, and then your coverage kicks in. Either you will be covered 100% because your out of pocket maximum has been met, or the insurance company will start to pay part, and you will pay part until you meet the out of pocket maximum. If you’re enrolling a family, whether just a husband and wife or husband, wife and kids, then you are looking at a family deductible and family out of pocket maximum. These numbers are generally double the individual numbers. That might sound daunting, but when you look at regular PPO plans, usually two individual deductibles and two individual out of pocket maximum. Some will have aggregates where the family expenses are combined.
But when you look at an HSA eligible plan, the total out of pocket expenses may end up less. You have to look at the specific plans to see that. And if you’re a resident of California, feel free to call or email me to look at these. Colleen@ckinginsurance.com
Where the HSA comes in, is this is money you put aside for your qualified expenses–medical, prescription, even dental and vision regardless if you have dental or vision coverage–doesn’t matter. Why these are becoming so popular is that you decide how much to put into the account, up to the annual limits. For 2008, you can deposit up to $2900, and for a family plan $5800. And there’s a make up contribution if you’re over 55! The best part? Anything you deposit into an HSA is deductible on your Federal tax return (we’re still working on it being deductible on the State return.) And at the end of the calendar year, it’s not ‘use it or lose it’ like you see with things like flexible spending accounts. It’s YOUR money, it rolls over to the next year.
Where I lose some people, is the idea that they are buying insurance, and yet still paying for a lot of their expenses–what good is insurance? Well, if something big happens, you’ll blow through your deductible in a heartbeat–I used to be an emergency nurse, trust me. The monthly premiums for an HSA eligible plan tend to be less than other plans. THAT’S another huge attraction.
So, look at HSA eligible plans in order to save on insurance premiums. (You aren’t obligated to open an HSA just because you have an eligible plan–no law requiring that!) Then, start your HSA to gain another deduction and pay for your expenses with ‘pre tax’ dollars. HSA eligible plans are available in both the individual and group health insurance arenas.
More on this later, so please check back–Be well!
Tags: Group Health Insurance · Health Savings Accounts · HSA · HSAs · Individual Health InsuranceNo Comments
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