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.
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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.
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).
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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; 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.
