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Health Insurance
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Health Savings Accounts
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Health Savings Accounts
Health Savings Accounts are
health plans that combine a high deductible health plan (HDHP) with
a tax free savings account.
A high deductible insurance
plan is less expensive than a low deductible plan. The idea is
that you would put the monthly premium savings into a tax-free
savings account and use the money to pay for medical expenses not
covered until your deductible is met.
Health Savings Accounts
replaced another solution called a Medical Savings Account when they
were passed into law as part of the 2004 Medicare reform bill.
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are established with a
financial institution and enable employees to use the accumulated
fund to help pay health plan deductible expenses |
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include money contributed
by you and/or your employer |
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funded with pre-tax
dollars and accumulate interest tax-free |
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do not include the use-it
or loose-it personality of the FSA account |
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can be used, after age 65,
to pay for non-medical expenses |
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are available when coupled
with high deductible health plans subject to guidelines below
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HSAs cannot be used to pay medical premiums unless you are on COBRA.
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HSAs can be used to pay
Long Term Care insurance premiums. |
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EXAMPLE - Family - 37
year old couple with two children coverage including
RX:
$500 individual/$1000 family deductible plan
with 80/20 co-pay: $580
$2500 individual/$5000
individual Wellness HSA: $313 (this plan covers well
visits prior to meeting the deductible)
Monthly Savings:
$267
Annual Savings: $3,204
These plans are not for
everyone, but if you can afford the extra risk you could realize
up to a $3,204 savings each year. If you put $2,000 of
the savings into your HSA, you will have the extra risk covered
with less out of pocket.
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HSA contribution limits
for tax year 2008
For tax year 2008, you can
make annual contributions to an HSA up to 100% of your
deductible, or 100% of your earned income, whichever
is less.
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HDHP
Minimum
Deductible |
HDHP
Out-of-Pocket
Limit |
Maximum Contribution |
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Self Only
Coverage |
$1,100 |
$5,600 |
$2,900 |
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Family
Coverage |
$2,200 |
$11,200 |
$5,800 | | | |
We recommend
HSA's to anyone who can afford the risk of a high-deductible plan and
who has the discipline to save some of their premium if they need to pay
their deductible.
For more
information on the HSA, and when we think it's best suited, contact
us! To see how to set up an HSA, see How to set up an
HSA.
For more
information on the Health Savings Account, click here HEALTH
SAVINGS ACCOUNT FREQUENTLY ASKED QUESTIONS.
Back to Solutions.
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