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Health Savings Account Insurance Plan


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Health Savings Account Insurance Quotes

Created by the Medicare bill signed by President George W. Bush on 8 December 2003, a Health Savings Account (HSA) allows individuals to save for current and future qualified medical and retiree health expenses on a tax-free basis.

Health Savings Accounts are only available to individuals who are enrolled in a High Deductible Health Plan (HDHP). Money in the HSA can be used to pay for expenses that are part of the deductible. Once the deductible is met, additional medical expenses are covered by the Health Plan.

Think of an HSA as an IRA that's earmarked exclusively for offsetting medical expenses. Money not spent stays in the HSA and accrues interest on a tax-free basis. Funds that are withdrawn from the account (at any time) and used for qualifying medical expenses are not taxed.

Health Savings Accounts are usually set up through insurance companies or banks. Contributions can be made by individuals and/or their employers. All money in an HSA is portable, meaning it stays with the individual no matter where he or she works.

What Health Savings Account Insurance Is Not

A Health Savings Account Insurance plan is not the same thing as a Flexible Spending Account (FSA). An FSA is a "use it or lose it" account: any money not used in a given year is not available for use the next year. With an HSA, money stays in the account from year to year and accrues tax-free with interest. The bottom line: an HSA is a much better deal.

The HSA is an evolutionary step up from the Medical Savings Account (MSA), which first became available in 1997. In general, HSAs are less restrictive and are available to more people.

It is important to note that an HSA is a savings plan, not a health care plan per se. It must be used in conjunction with a qualifying health care plan.

Who Needs Health Savings Account Insurance?

People who want to lower the cost of their health care insurance premiums, and who want more control over their health care options, will definitely want to check out whether they're eligible for an HSA.

To qualify, individuals must:

  • Be covered by an HDHP (with a deductible of at least $1,000 for a single person; $2000 for a family).
  • Not be covered by another health care plan (with certain exceptions, including vision, dental, and disability).
  • Not be enrolled in or eligible for Medicare.
  • Not be able to be claimed as a dependent on someone else's tax return.

There are no income limits or minimum income requirements to enroll in a health savings account. People between 55 and 65 years of age are eligible for make-up contributions (up to a set maximum) to their HSAs.

Things To Think About

If you currently have health insurance—whether through your employer or on your own—you'll want to find out if it qualifies as a HDHP. Also, some Flexible Spending Accounts and Health Reimbursement Agreements may disqualify individuals from enrolling in an HSA.

If you qualify for health savings account insurance, how much should you contribute? The U.S. government sets a maximum amount that you can contribute. For 2011, the maximum contributions are $3,050 for single coverage and $6,150 for family coverage. The maximum amount will be adjusted annually for inflation. The amount you actually contribute should be based on the size of your deductible, your disposable income, and your health needs.

In some cases, an HSA account can be used to pay for COBRA coverage and for Long Term Care Insurance premiums.

Related Links

Health Savings Accounts. Official U.S. Treasury Department website.

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