Are you looking for a more cost effective way to handle your health insurance. You may have looked at several different options from medical savings accounts, flex savings accounts, to the typical health insurance plan.
However in this article I’m going to cover another possible option that has only been around since 2003, HSA health insurance plans.
What Is HSA Health Insurance
An HSA health insurance plan is not health insurance but rather a savings account used to help offset the cost of your health insurance. It’s not meant to replace your current policy but rather add to it. It can be added to a single or family plan or even offered by your employer.
Think of it this way, HSA qualified health insurance is made up of two parts. The first is you have to qualify for a high deductible health plan (HDHP). These are the only insurance plans you can combine your HSA with. The reason for this is because high deductible plans will offer much lower premiums versus your typical major medical coverage. In fact an HDHP can cut around 40% to 60% of the cost to a normal plan.
The second part of the plan is the HSA savings account. This account is used to help set aside money for all of your health insurance needs. Since the typical HDHP will have a deductible of $5000 to $10,000, the savings account will help cover those cost and more.
Benefits Of HSA Accounts
So you might be wondering what the benefit to something like this would be. First off, it will cut down the usual high cost of a health insurance plan. I recently looked at these plans at my place of work and they were over a $100 less than the other major medical plans.
Second, the HSA savings account also has a tax free benefit when you used on qualified medical expenses. This means it could cover anything from a copay at the doctors office to buying band aids at Walmart. You could even use the money saved up in this account to pay for dental visits, eye doctor appointments, and even going to the chiropractor.
Doing this could also significantly lower your tax burden as well. However, you should also know that these tax benefits could be changed at any time as well. In fact, in 2011 a ruling will go into effect by congress that won’t allow you to receive tax free benefits on any over the counter medications.
Down Sides To An HSA Plan
Finally their are some down sides to HSA plans. First if you don’t use the money for a qualified medical purchase you will face some tax penalties similar to those of an IRA.
Next another problem with HSA plans is that order to receive benefits of your health insurance you will need to meet the deductible amount of your plan which a can be $5000 to $10,000 before the insurance company will pick up the rest of the tab.
On the flip side of this these accounts were set up this way to give the person who has the policy more responsible with their health insurance and as a result they would not spend as much since the deductible were so high.
Finally, with HSA plans if you would like to move the money out of the plan the only way you will be able to do it is by putting it in another HSA account.
Is It For You
Finally, is this plan for you? If your looking for lower cost to your health insurance and way to save for your future medical expenses the HSA plan may be for you. Currently you able to contribute up to $3050 for a single person in an HSA and $6150 with a family plan, and if your 55 and older you will be able to contribute an extra $1000 a year.
To learn more about HSA health insurance contact your local insurance agent and he will be able to run a few illustrations as to how this kind of plan could specifically benefit you.