What is an HSA Plan?
Health Savings Accounts and High Deductible Health Plans
HSAs At-a-Glance
An HSA is a PPO Plan with a high deductible up front that is IRS approved to be used with a tax advantaged account.
Positives
- Tax sheltered savings account
- Better coverage after a deductible
- Some wellness built in before deductible
Negatives
- You may have co-pays after deductible
- More risk upfront than with HMO or PPO
- You pay 100% of costs before deductible
Popular Individual HSA Plans
If you are like other Health Insurance shoppers in California, You've probably heard
people talking about Health Savings Accounts or HSA Plans. Maybe you're wondering
what they're all about? Here are some of the most commonly asked questions about
High Deductible Health Plans(HDHP) and Health Savings Accounts(HSA's).
Health Savings Accounts offer the most affordable individual health insurance plans
available today. The government is going to help you pay for your health insurance
through tax deductions. You do not even have to itemize to get the savings!
One of the benefits of the new Medicare bill, besides making the pharmaceutical
manufacturers richer, was the creation of Health Savings Accounts.
These are tax-sheltered accounts similar to IRA's designed to pay medical expenses.
Let me explain how these plans work.
If you're ready for a new kind of health insurance solution and you want more control
of your healthcare dollars, a Health Savings Account may be right for you. You may
also enjoy the freedom offered by HSAs if you utilize healthcare services not always
covered by health insurance plans (like acupuncture, LASIK surgery, and chiropractic
treatment). And if your employer is willing to contribute money to your Health Savings
Account in lieu of providing group insurance coverage, then you really owe it to
yourself to learn more.
The HSA plan has essentially two parts.
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First there is a high-deductible major medical plan, often called the HDHP
or High Deductible Health Plan. This is a complete health insurance plan
that will provide millions of dollars of coverage for you and your family. Once
you reach your deductible and/or out of pocket maximum, all eligible expenses are
covered 100%.
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The second part is the Health Savings Account. This is
an interest-bearing account and the money rolls over from year to year. You can
use the savings account funds for almost any type of medical expense without worrying
about networks. Money contributed to a California HSA is exempt from both Federal
and State taxes, like an IRA, and accumulates interest on a tax deferred basis,
like an IRA. Unlike an IRA, the exempted funds in a Health Savings Accounts can
be used immediately for any qualified medical expense. This includes doctors, dentists,
prescriptions, psychotherapy, chiropractor, etc. You can even pay for your long
term care insurance with tax-free money.
HSA Plans are a type of high deductible plan that has two distinct parts. The first
part is the health insurance portion usually referred to as a high deductible plan,
or sometimes called a "Catastrophic Loss Plan". These health insurance plans are
first subject to the deductible of at least $1750 before any benefits are given
under the health insurance. The second portion, is an optional tax deferred savings
account. HSA accounts are very similar to IRA's in several ways. Health Savings
Accounts (or "HSAs") provide consumers like you with a new way of managing
your healthcare. An HSA program consists of an HSA-eligible health insurance plan
combined with a tax-advantaged savings account. Funds in your account may be saved
or used to pay for healthcare services before your health plan's deductible is met.
Used together, these health plans and accounts give you more control over your healthcare
dollars.
Yes. Because they come with higher deductibles, HSA-eligible health insurance plans
often have lower monthly premiums. You can deposit these premium savings into an
HSA bank account to earn a new tax deduction and use these funds to pay for qualifying
medical expenses tax-free. Unused funds in your account will roll over from year
to year and may be saved and invested for retirement. Consumers across the nation
are using their HSAs to save thousands of dollars per year toward their future medical
expenses or retirement.
For personal assistance, email us, or use my online chat feature, or call me at
877-758-7587, M-F, 9am to 5pm, Pacific Time.
Recently Health Net have introduced new HSA
products like their EZAccess HSA program. And
Nationwide continues to offer their trail blazing HSA products: the Choice
Saver Select plans.
- Deposit accrue tax deferred in the HSA account.
- Deposits reduce your taxable gross income for the year.
- When withdrawn for a qualified medical expense, there is no taxes owed.
An important concept to keep in mind is that just because something may qualify
under the IRS tax code as a qualified medical expense, it does not automatically
mean that it will also be covered by the health insurance portion.
HSA plans are also sometimes called a "Catastrophic Loss Plan", Health Savings Accounts
are a type of a PPO that qualifies under the IR-2005-130 as a High Deductible Health
Plan. Participants in H.S.A plans buy even less insurance than a traditional PPO,
and retain more risk. Generally this is a good option for self employed individuals.
Positives: Covers some preventative care not subject
to deductible. Tax sheltered savings account to cover the higher deductibles associated
with this type of Health plan, up to $2700 maximum for individuals, and $5450 for
families. Lower monthly premium than comparable PPO plans. Doctor selection equals
that of PPO plans.
Negatives :You pay 100% of office visits, labs, tests,
x-rays and prescription medication until you meet your initial deductible. Some
plans then cover 100% after the deductible, others still have co-pays or co-insurance
after the deductible is reached.
Health Savings Accounts in conjunction with a High Deductible Health Plan or simply,
"HSA's" are plans that offer tax savings and investment options with Health Insurance
products. Below is an example of how Health Savings Account plans are designed to
work.
HSA Plan Example: Suppose for this example we take a family of
four consisting of two parents ages of 46 and 41 with two dependent children. Lets
suppose that this family has a PPO Health Insurance Plan with a $5,000 deductible,
and it costs $300.90 a month for the premium. They decide to use an HSA account
to save money on their taxes, and cover their annual deductible. $5,000 deductible
divide by twelve months averages out to $416 a month.
Health Savings Account (HSA):
- $5,000 - Health Insurance Deductible
- $300 - Monthly Cost of Insurance
- $416 - Deductible divided by twelve months
- $716 - Total Monthly Cost
And here is a sample of the tax savings benefits this plan allows the family. We
will use a 28% tax bracket for this illustration.
Tax Deduction for Insurance (Insurance Rate x 100% x 28%) $84.25
Tax Deduction for Savings Deposit (Savings Deposit x 28%) $120.16
Total Tax Savings $204.42
Cost After Tax Savings $525.64
But remember, the $429.16 is your money. It is sitting in an interest bearing
account in your name. You never gave it to the insurance company—so subtract
that amount out.
The Net Monthly Cost of Insurance after Taxes $96.48
With a Health Savings Deposit of $5,150.00 at the end of the year.
This is a general description of how an HSA plan works, give us
a call to discuss the details and your specific situation which may vary. Call 877-758-PLUS
(7587) for information about the new California HSA (Health Savings Accounts)
Plans.
The new HSA (Health Savings Accounts) are tax advantaged health insurance
plans that are available to everyone. You do not have to be self-employed. You can
end up with a tax write-off that is equal to your insurance premiums.We have HSA
plans for businesses. We can show you how to cut thousands off your group health
insurance bill. Health Savings Accounts - More Info? Call 877-758-PLUS
(7587)
Back to
HSA's.
Most Popular Individual H.S.A. Plans: Nationwide Plan X 1750, Aetna
Plan 2 HDHP
Some of the most popular HSA savings account administrators are through the following
banks, Wells Fargo, Exante Bank, Sterling HSA, First Horizon MSA
Plan Types
