As you are browsing health plans from the enrollment page, you’ll notice that some of the lower priced plans are called “HSA Compatible”. HSA’s are high-deductible health plans that are tied to a special purpose savings account, and the money in that account can be saved and used for medical expenses.
Money in your HSA savings account can be used for qualified medical expenses, and is not subject to tax. However, if you use money from the HSA savings account for something other than qualified medical expenses, then it may be subject to tax. The maximum amount that you can contribute to the HSA savings account in 2015 is $3,350 for an individual, and $6,650 for a family.
Some believe that HSA’s help reduce the upward trend of health care costs while increasing the efficiency of the health care system. The idea is that HSA’s will encourage saving for future health care expenses, enabling you to make your own health care choices, rather than having a “gatekeeper” determine what benefits are allowed. This has the effect of allowing consumers to make their own health care choices. Also, the money that is saved in your HSA savings account earns interest, and won’t be taxed if used for medical expenses.
Some say that HSA’s make the health care system worse because people will spend unnecessarily when their HSA account has accumulated money, just to avoid paying penalties on the withdrawal of funds. The accounts may incur banking fees, and there is some debate about how satisfied consumers actually are with these plans, in fact, nearly half of those who enroll in an HSA health plan never even open up their HSA bank account.
To enroll, you cannot be covered by another health plan that is not an HSA health plan, you cannot be covered by Medicare, and you cannot be a dependent on someone else’s tax return. If you are interested in enrolling, look for Bronze level plans (usually $5,000 annual deductibles) with the letters “HSA” after the plan name. Once you have enrolled, you can go to a bank and open up a dedicated HSA savings account for your new health plan. Then you can start putting money away for deductibles and copays and other qualified medical expenses for when you need them.
There are a lot of rules about HSA’s which is beyond the scope of this short posting, for full details on HSA plans, please consult the HSA plan rules on the insurance carrier’s websites. But as always, if you would like to speak with someone, please call our office at 1-800-400-6633.