HSA
Basics
What
is a Health Savings Account (“HSA”)?
A Health Savings Account is an alternative to
traditional health insurance; it is a savings
product that offers a different way for consumers
to pay for their health care. HSAs enable you
to pay for current health expenses and save
for future qualified medical and retiree health
expenses on a tax-free basis.
You
must be covered by a High Deductible Health
Plan (HDHP) to be able to take advantage of
HSAs. An HDHP generally costs less than what
traditional health care coverage costs, so the
money that you save on insurance can therefore
be put into the Health Savings Account.
You
own and you control the money in your HSA. Decisions
on how to spend the money are made by you without
relying on a third party or a health insurer.
You will also decide what types of investments
to make with the money in the account in order
to make it grow.
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What
Is a “High Deductible Health Plan”
(HDHP)?
You must have an HDHP if you want to open an
HSA. Sometimes referred to as a “catastrophic”
health insurance plan, an HDHP is an inexpensive
health insurance plan that generally doesn’t
pay for the first several thousand dollars of
health care expenses (i.e., your “deductible”)
but will generally cover you after that. Of
course, your HSA is available to help you pay
for the expenses your plan does not cover.
In
order to qualify to open an HSA, your HDHP minimum
deductible must be at least $1,000 (self-only
coverage) or $2,000 (family coverage). Max deductibles
are $2650 and $5250. The annual out-of-pocket
(including deductibles and co-pays) cannot exceed
$5,100 (self-only coverage) or $10,200 (family
coverage). HDHPs can have first dollar coverage
(no deductible) for preventive care and apply
higher out-of-pocket limits (and copays &
coinsurance) for non-network services.
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How
can I get a Health Savings Account?
Consumers can sign up for HSAs with banks, credit
unions, insurance companies and other approved
companies. Your employer may also set up a plan
for employees as well.
How
much does an HSA cost?
An HSA is not something you purchase; it’s
a savings account into which you can deposit
money on a tax-preferred basis. The only product
you purchase with an HSA is a High Deductible
Health Plan, an inexpensive plan that will cover
most of your medical expenses should your expenses
exceed the funds you have in your HSA.
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