What is the HSA health insurance?

As health care costs continue to rise, along with health insurance premiums, more and more people are looking for alternative ways to help cover their health care expenses. One of these methods is the Health Savings Account (HSA), a fairly new plan that allows you to allocate tax-free healthcare funds.

Health savings accounts differ from other interest-bearing products, such as flexible spending accounts and PPOs, as the HSA carries over from year to year, there is no "use or loss"). In addition, interest is paid on the account, and the money paid can also be invested in mutual funds, which are owned by you and not by the employer. For these reasons, HSA has often been compared to "medical IRA".

To qualify for the HSA, they must be covered with a High Health Discount Plan (HDHP). Sometimes called a "catastrophic" health insurance plan, a high-quality health insurance plan is an affordable health care plan that generally does not pay the first few thousand dollars of health care expenses, which are deductible, but often covers it after that. HDHP generally costs less than traditional health care coverage, that is, $ 300 per month. In installments of $ 200 / month. For HSA), so the funds you save on insurance can be deposited into a health savings account. The money in HSA is there to pay for expenses that HDHP does not cover.

You can register with the HSA through banks, credit unions, insurance companies, and other approved companies. Employers can also create a plan for employees. Currently, you can contribute up to $ 2,850 annually for individual coverage or $ 5,650 for families 55 and older, and you can make an additional contribution of $ 800).

Since 2007, to qualify for an HSA opening, the minimum discount for your HDHP must be at least $ 1,100 for your own coverage or $ 2,200 for family coverage. Annual out-of-pocket costs, including discounts and copays, cannot exceed $ 5,500 for self-coverage only or $ 11,000 for family coverage.

Health savings accounts are available to anyone under the age of 65. However, people enrolled in Medicare or receiving VA benefits cannot create and contribute to HSA. If you had an HSA before you enrolled in Medicare or started receiving VA benefits, you can keep it but you cannot continue to make contributions to the account.

Also, to open an HSA, you cannot be covered by any other health insurance policy other than a highly eligible deduction plan, either as an individual or a dependent), although you may still have other disability, teeth, or insurance policies. vision and long duration. Outdated care and VA benefits.

According to Tom Shriver, vice president of national sales) at NetQuote, one of the main benefits of the HSA relates to the tax advantage it provides.

"One of the biggest benefits is being able to pay your medical expenses with your dollars before taxes," Shriver said. "For every dollar before tax I spend on HSA, I actually get $ 1.38. This represents a 38% increase in my case."

Due to HDHP's high discounts and the fact that the HSA is essentially a savings account, Shriver says that health savings accounts benefit healthier people than those who need extensive medical care. The less you benefit, the greater the probability of accumulating a large amount of money in the account.

"HSA is a better investment if you are healthy," says Shriver. "The people who benefit the most are the people who don't use them anymore. Helping to pay for catastrophic health care events is more than ongoing medical care. Therefore, before deciding to open an HSA, it is important to assess your medical condition and how often you go to the doctor. "

However, if you decide that the HSA is the right path for you and your family, it could be a better investment than regular health insurance. HSAs allow you to pay your current health expenses and provide eligible health and medical expenses for tax-free retirees. Additionally, you own and control the funds in your HSA. Decisions on how to spend money are made without relying on a third party or health insurance company. It will also determine the types of investments you must make using the funds in the account to grow them.