The Basics
of HSAs
What is
a Health Savings Account (“HSA”)?
What Is
a “High Deductible Health Plan”
(HDHP)?
How can
I get a Health Savings Account?
How much
does an HSA cost?
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.
^
TOP
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.
For 2010, in order to qualify
to open an HSA, your HDHP minimum deductible
must be at least $1,200 (self-only coverage)
or $2,400 (family coverage). The annual out-of-pocket
(including deductibles and co-pays) cannot
exceed $5,950 (self-only coverage) or $11,900
(family coverage).
^
TOP
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; its
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 you should your medical
expenses exceed the funds you have in your
HSA.
