Individual Health Insurance
HSA - Health Savings Accounts
An HSA health plan is a medical health insurance policy that meets the guidelines for qualifying for a Health Savings Accounts (HSA). An HSA is an account to which individuals, family members and employers can make tax-deductible cash contributions, similar to an IRA. These funds can then be used to reimburse the individual (tax-free) for qualifying medical expenses such as deductibles, co-payments, dental and vision care. Withdrawals from the account are exclusively for the purpose of paying qualified medical expenses of the account beneficiary.
HSA accounts, and the tax laws that accompany them, were established by the Medicare Prescription Drug Improvement and Modernization Act of 2003. In order to open and HSA, you must first been enrolled in a health plan that meets the federal guidelines. If you purchase and HSA qualified health plan, you are not required to open, or make deposits, into an HSA account.
Money that you contribute to a Health Savings Account belongs to the your (the depositor) or the beneficiary on the account and you have access to the money at any time. There are penalties for early withdrawal if the money is not used for eligible health care expenses. You can make an additional deposit into this account every year and if you are insured under an HSA plan through your employer, the employer is permitted to make the annual contribution and they will receive the tax-deduction benefit. If your employer has a "cafeteria plans" you can make indirect deposits into your HSA through a salary reduction plan.
Many medical and health insurance companies offer health plans that meet HSA eligibility, and they are become more common as the cost of health insurance rises nationwide. These are high deductible health plans (HDHP) that have a set deductible amount, ranging from $1,050 to $5,250 for individuals. The availability of deductible options depends on your state of residence and the access to insurance companies offering this type of coverage. The annual out-pocket-maximum (coinsurance limit), must also not exceed a specific dollar amount in order to qualify as and HSA health plan. This limit may be low compared to the maximum limit on many PPO plans. Once this maximum has been met, the insured member is covered in full for the remainder of the calendar year for all medical expenses covered under the plan. One unique feature of an HSA plan is that prescription drug coverage is treated like any other covered medical expense. You must first meet the annual deductible, and then a set coinsurance until you reach the maximum.
An HDHP plan will often work with a network or preferred providers, much like a PPO plan. Using this network for health care will provide you access to services at lower negotiated rates. However, you will have the freedom to use physicians outside of the network, but at a higher share of cost to you, at rates that are not monitored by your medical and health insurance insurance company. Some HDHP plans may place emphasis on preventive health care by allowing you annual physical exams and well-care checkups without having to meet your deductible first. The availability of this benefit varies from one insurance company to another and may not be available in all states.
For more information on Health Savings Accounts, contact your bank or financial consultant or visit the US Treasury Department's Health Savings Account site.
For providers of HSA accounts in your state, visit our individual health insurance page and start by selecting the state where coverage will be provided.
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