HSA Plans

A Health Savings Account (HSA plan) lets college students save on health care expenses. 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 are the student health insurance plans with the most freedom, because health decisions are mostly in your hands. However, with this freedom comes greater responsibility. The HSA is combined with a high deductible plan, resulting in cheap student health insurance. Approved withdrawals aren’t penalized.

HSA health plans can pay for virtually all medical expenses: co-payments and co-insurance amounts for hospital stays and doctor visits are included. So are prescription and approved over-the-counter medications, and even bandages. How do these student health insurance plans work? After buying 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. While using the HSA debit card is far more convenient, don’t worry if you accidentally leave it in your dorm room. In that case, you can file a claim and receive reimbursement from your health savings account for the purchase.

One of the main advantages of HSA plans is that the money in the account rolls over from year to year, earning interest. This means that you can make deposits when you are young and healthy, and don’t have to use the majority of that money unless or until a serious illness or injury comes along. Having an HSA plan encourages you to save for medical expenses and take control of your health care by shopping around. On the other hand, skimping on too much preventative care is one of the downfalls of a HSA health plan. You must also avoid the danger of withdrawing money from your HSA for frivolous purposes. 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. Most students are under 65 years old, so there is a 10% penalty on top of that.

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 compared to other student health insurance options, most non-emergency medical expenses should be paid for by your tax-free HSA plan, as opposed to your taxable income as a student. HSA insurance plans are best for young, healthy individuals who tend to use fewer medical services, making them ideal health insurance for students. Although you pay more out-of-pocket, the savings on HSA health insurance premiums will probably cancel out those costs.

If you are thinking about buying HSA student health insurance, VitalOne is here to help. Our licensed insurance agents will help you compare health savings accounts and high-deductible health insurance plans.

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