Health Savings Accounts — HSA Plans, Coverage & Quotes
A HSA plan, which is also known as a Health Savings Account, is a way for individuals to save money on their health insurance. HSA health plans consist of tax-exempt savings accounts that are used for medical expenses. When money is deposited, no federal income tax is imposed. HSA plans offer the greatest level of freedom, since there is no gatekeeper standing in the way of your health care. The HSA is combined with a high deductible plan; this results in lower premiums. HSA insurance plans have the potential to save you money on medical expenses, since approved withdrawals aren’t penalized.
What do HSA health plans cover? These accounts can be used to pay for almost all legitimate medical expenses: co-payments and co-insurance amounts for hospital stays and doctor visits are included, as well as both prescription and approved over-the-counter medications. Your HSA insurance plan will even allow you to pay for Band-Aids! After establishing a HSA health insurance plan, you will receive a debit card that can be used in most medical offices, hospitals, and pharmacies that accept major credit cards. If you forget to use your HSA debit card on an eligible purchase, you can file a claim and receive reimbursement from your health savings account. However, using the HSA debit card is far more convenient.
Many employers already offer a health savings account plan to their employees, and that percentage is increasing. Some employers contribute to HSA plans, in addition to or in lieu of subsidizing other forms of health insurance. Individuals can also sign up for a HSA insurance plan themselves. One of the main advantages of HSA plans is that the money in the account rolls over from year to year. What’s more, it also earns interest. Having an HSA plan encourages you to save for medical expenses and take control of your health care by shopping around. However, you must be very careful and diligently research your health care options. Some people may end up inadvertently avoiding necessary preventative care due to an HSA health plan.
Remember that while you aren’t bankrolled by a managed care plan, you still can’t use your HSA funds for a vacation or big-screen TV without consequences. If you take out health savings account funds to spend them on non-medical expenses, they will be taxed in your normal income tax bracket. In addition, there will be a 10% penalty if you are under 65 years of age.
HSAs are typically partnered with a high deductible health insurance plan. Health savings account plans that have an annual deductible of $1,100 or more for individuals qualify. Total out-of-pocket expenses per individual cannot go above $5,500 per year under an HSA health plan. While that amount seems high, most non-emergency medical expenses should be paid for by your tax-free HSA plan, as opposed to your taxable income.
Who are HSA insurance plans best suited for? They can be ideal for healthier and younger individuals who tend to use fewer medical services. The savings on HSA health insurance premiums will probably outweigh the increase in out-of-pocket expenses. Individuals who are older or who have pre-existing conditions may find that most HSA plans don’t fit their needs, although there may be options available.
VitalOne will be your guide while navigating through the complexities of health savings accounts and high-deductible health insurance plans. Our licensed insurance agents are here to help you select the combination of HSA health insurance plans that is right for you.