Health Insurance – The HSA option
Save money on your health insurance premium and get a tax break!
Look into a Health Savings Account (HSA) qualified health plan.
Many people call our agency asking the question ”How we can save money on our health insurance?” With the high cost of health care today protecting your family is more important than ever, but so is being able to afford it. Unfortunately, the days of low deductibles and co-pays are gone. Why do we have health insurance? Is it for the sniffle and sneezes coverage, or to protect your family from the cost of catastrophic injuries and illness? Health Savings Account qualified health plans, (HSA), are the only way to bring premiums down dramatically enough to make a difference.
HSA health plans are deductible only plans, which range from a $ 2,500 deductible, (5,000 Family) up to as high as a $ 5,000 deductible, ($10,000 family). Office visits, prescriptions, lab, x-rays, and hospitalization will go towards your deductible. Once you hit your maximum annual out-of-pocket the health plan will pay 100% thereafter. Even though everything goes towards your deductible you still receive the contracted discounted charge for the service. This will be well below what the provider will charge if you didn’t have insurance.
The flip side of and HSA is setting up a health savings account with your bank. This account is no different than any checking or savings account you might have. Your account will be used to pay all your health expenses. You will receive a credit card and checks to pay your office visits, prescriptions, lab, x-rays, and hospitalization. Things that aren’t covered under your health insurance can still be paid out of your account as long as it’s a qualified health expense. For example dental, vision, chiropractic, and over the counter drugs can all be paid out of your HSA. The list of covered expenses will be given to you by your bank. Health premiums cannot be paid through your HSA account.
The tax break the government allows is simple. Any money you put into your HSA account will come off of your taxable income at the end of the year. Your account will gain interest and will roll over every year. On individual health plans you are allowed to deposit up to a maximum of $ 3,050 per year, a maximum of $ 6,150 per year is allowed for a family. Group HSA plans will allow a maximum deposit of $ 6,150 per year for an individual or family. If you are over the age of 55 you can put an additional $ 1,000 above the maximum amounts allowed. The minimum amount you can put into your account per year varies from bank to bank; however the average minimum is around $ 200.00 per year. Any money you spend out of your HSA for none qualified expenses you will receive a 10% penalty and you will be issued a 1099 at the end of the year. At age 65 you will be able to withdraw what’s left in your account tax free. It is very similar to how a 401k or IRA works.
Bottom line; an HSA lowers your health insurance premiums, and gives you a tax break for doing it!