In the fantastic response we received to our previous blog on high-deductible health insurance, we received some questions about what health savings accounts are and how to use them in conjunction with a high-deductible health insurance plan, so we wanted to have a follow-up blog on health savings accounts.
Health savings accounts (usually called HSAs) are funds that can combine with a high-deductible health insurance plan to help you pay for your healthcare. They’re not as complicated as they might seem at first glance. You can think of them as medical bank accounts which you can set up to get more out of your healthcare dollars, especially because you can fund your HSA with pre-tax dollars.
If you have a high-deductible health insurance plan, starting an HSA is a no-brainer. High-deductible health insurance by its very nature means high out-of-pocket expenses because a high-deductible needs to be met before coverage kicks in. HSAs let you use pre-tax dollars to pay for your portion of eligible health care expenses, including your deductible, co-payments/co-insurance, prescription drugs, and other expenses such as eyeglasses, dental care, over-the-counter medication, and saline.
In addition, unlike the money deposited into Flexible Spending Accounts (FSAs) which needs to be used up within each calendar year, money in an HSA can stay in the HSA indefinitely. You can save money in an HSA over the course of several years to pay for expensive medical treatment if you need to without any penalties, and others (like your employer or family members) can also contribute to your HSA.
In order to qualify to start an HSA, you must belong to a high-deductible health insurance plan which meets IRS qualification requirements. The IRS requirements for a high deductible health plan for 2010 are as follows:
Minimum Deductible (Individual): $1,200
Minimum Deductible (Family): $2,400
Maximum Out-Of-Pocket: $5,950
Maximum Out-Of-Pocket: $11,900
For more information about high-deductible health insurance, HSAs and related topics, visit us at MyHealthCafe.com:
- High-Deductible (Catastrophic) Health Insurance Plans: What Are They? Are They Worth It?
- Follow-Up: LA Times Column on Impact of Anthem Blue Cross Health Insurance Rate Increases
- Anthem Blue Cross Hikes Health Insurance Rates Up to 39%
- Everyone in the Pool: Congress Launches Investigation into Anthem Blue Cross Health Insurance Rate Increases
- Update: Department of Health and Human Services Inquiry on Anthem Blue Cross Rate Hikes