There is a not-so-new kid on the block when it comes to looking at health insurance options. Health Savings Account plans, or HSA’s for short, have been available for a while now, however they are just starting to become a household name. Often when I am discussing these radically different plans with clients, they will ask me, “So, do you sell a lot of of these?” and my response usually surprises when I tell them that HSA’s account for 90-95 percent of my business. I guess the strength in numbers theory applies here as other people take comfort in knowing there are other people who have ventured out on the HSA limb and have lived to tell about it.
I have put together a list of five things you should know about Health Savings Account plans.
1. You Don't Have To Put Money in a HSA Bank Account
Too often people find themselves getting caught up in the details of the bank account portion of HSA’s. The truth is, opening up an HSA is completely optional and not required as part of the High Deductible Health Plan (HDHP) portion of the HSA. The most important thing to focus on is the benefits of the health plan and if that structure works best for your situation.
2. It's Easy to Keep Track of Your Out-of-Pocket Max
When you choose a Health Savings Account plan with zero percent coinsurance your deductible is your out-of-pocket maximum. Of course HSA’s are offered with different levels of coinsurance, however zero percent coinsurance is ideal because it makes it easy to remember how much money you could be out in the event major medical services are needed. That means if you have a $2,500 deductible, then the most you can spend on covered, in-network, medical expenses that year is $2,500. Even if you end up in the hospital for a week and incur over $50,000 worth of services, $2,500 is all you will pay.
3. Preventative Benefits are covered at 100 Percent
All health insurance plans purchased after March 23, 2010 are required to cover preventive services at 100 percent before the deductible and without any copayments. Basically a fancy way to say free of charge. Interested in yearly physical exams, PAP test or mammograms? No problem. Those, and many other services are provided at no additional cost under the preventive benefit. However, this benefit only applies when services are delivered by an in-network provider.
4. Take a Tax Break
Money going into an HSA is tax-deductible and tax-free when withdrawn for a qualified medical expenses. A few examples include: prescription medication, eyeglasses, office visit co-pays, chiropractor visits, dentists, orthodontists and laser eye surgery to name a few. You can find a list of qualified expenses on the IRS website at www.irs.gov.
5. Money in Your HSA Account Rolls Over
Didn't meet your deductible this year? No problem. The balance of your account rolls over from year to year allowing you or your family to accumulate a safety net if you are ever in need of serious medical treatment. Don’t worry about losing money deposited into your HSA account, it will always be there for when you need it. Just make sure you don’t over fund the account. If you have to withdraw money for a non-qualified medical expense you will be subject to a 20 percent tax penalty.
So now that you are more familiar with HSA’s do you think a Health Savings Account plan would work for you or your family?