HSA (Health Savings Account)

 

Q: What is an HSA (Health Savings Account) Plan?

 

A: An HSA is a special tax-sheltered account for medical bills. This account must be combined with a High-Deductible health insurance plan. The tax rules for this account are similar to that of an IRA. The money goes into this account pre-tax from an employee's paycheck or it can be a tax deduction if deposited into the account with after-tax dollars. The high deductible health insurance plan that is used in conjunction with this plan is priced much lower than typical co-pay health insurance plans.

 

People insured with an HSA plan have much more control over their health insurance spending. Any money left in the HSA account at the end of the year rolls over to the next year, with no cost or penalty. YOU DO NOT NEED TO FUND THIS ACCOUNT. However, there are tax advantages to doing so. Typically, the high deductible health plan associated with this account is structured in the following way:

 

The insured pays all medical bills (At the insurance carrier's discount) including Rx up to the deductible amount. The Insurance Company then pays all claims based on the coinsurance percentage stated in the plan, for the remainder of the year. The minimum deductible amount is $1,200.00 annually for a single person and $2,400.00 annually for a family. You can deposit an amount up to the IRS stated annual limit into your HSA account on a yearly basis. However, whether the money is used or not, you can still deposit up to the maximum (based on IRS limit) each year. For 2010 the individual maximum contribution is $3,050, and the maximum family contribution is $6,150. 

 

You will receive a Debit Card and / or checks that are attached to the HSA bank account to use in paying for medical services. The Insurance Company will track your deductible based on approved claims. YOU MUST SHOW YOUR INSURANCE CARD to all medical providers, including pharmacies, at the time of service. This will ensure that the Insurance Company is appluing the discount to your services and tracking your payment of the deductible. DO NOT PAY for any medical services (Except Prescriptions) at the time the medical services are rendered. The Insurance Company will send an E.O.B. (Explanation of Benefits) to your home and inform you of the amount you are to pay for medical services.

 

You can use the money in your HSA account for other related medical care, although you will not get credit for reaching your annual medical deductible with the insurance carrier.

 

These related expenses include, but are not limited to the following: Dental Expenses, Vision Expenses, Cobra Premiums, Health Premiums paid while on Unemployment, Long-term care premiums, over-the-counter medications, and Durable Medical equipment.

 

The same In-Network vs. Out-of-Network rules apply to the HSA high deductible health plan. Always verify that your medical provider is in the Insurance Company's Network.

 

If you have any other questions regard the use of your HSA health plan, please e-mail one of our staff or call our hotline.