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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!
