Health Savings Accounts - HSAs

Health Savings Accounts, or HSAs, were created as part of the Medicare Reform Act of 2003 and provide consumers a tax-exempt vehicle in which funds accumulate to pay small medical expenses coupled with a high-deductible insurance plan to protect against major medical expenses. These plans were created in response to the rising cost of health care with the intent to give the consumer back the control of their health care costs and in many cases reduce premiums by 30-40% or more on an annual basis.

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Is a Health Savings Account (HSA) Right for Me

A Health Savings Account, or HSA, is a tax-exempt account with a financial institution in which funds accumulate to pay for medical expenses. They were created in response to the rising cost of health care with the intent to give the consumer back the control of their health care costs as part of a movement towards consumer-driven health-care. HSAs also give financial incentives for employers of all sizes to provide health insurance and individual consumers to have health insurance. HSAs allow you to enjoy tax reductions while having affordable health insurance premiums.

There are two parts to the HSA concept. Before a health savings account can be opened, a qualified High Deductible Health Plan (HDHP) must be in place to cover the individual or family. An HDHP provides health coverage for an individual or family with an affordable premium. The guidelines for an HDHP are determined by the Internal Revenue Service each year. To determine if your plan qualifies, please contact your health plan representative. The current requirements of an HDHP are as follows:

Below are the official minimum deductibles, maximum contribution amounts, and maximum out-of-pocket limits for 2007.

How Does a HSA Work?

When an HSA is combined with a higher deductible, HSA qualified health plan (required) then the HSA and the insurance policy is meant to replace a much higher cost, more restrictive, traditional health insurance plan. Traditional health plans with co-pays are typically 30 to 70% higher in cost, more restrictive to use than an HSA and still leave you with out of pocket expenses most people don't expect to pay.

What are my Deductible Options?

What applies to my deductible?

All covered medical expenses apply to the deductible each year including Doctors office visits, Prescriptions, and any major medical claims. HSA family plans have one deductible for the entire family per year. So, all covered medical expenses for the entire family apply to one deductible.

How many deductibles are there?

There is only one deductible for the entire family when 2 or more people are covered on the same plan unlike traditional plans that require a deductible for each member of the family. We typically suggest a 100% co-insurance level to limit the entire out of pocket expenses to the chosen deductible.

Minimum Deductibles:

• $1,100 for Individual Coverage
• $2,200 for Family Coverage

Maximum Contributions:

• $2,900 for Individual Coverage
• $5,800 for Family Coverage
  

Out-of-pocket Maximums:

• $5,500 for Individual Coverage
  $11,000 for Family Coverage
  

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Why Should I Have a HSA

If you or your employer are tired of sending hundreds and hundreds of dollars each month to your health insurance company, and would prefer to keep a big chunk of that money for yourself to spend on health expenses or save it for the future, then you need to look into a Health Savings Account.

Comparison
Question	HRA	FSA	HSA
Do the funds belong to the employee?	NO	YES	YES
Can the money be invested and the employees earn interest?	NO	NO	YES
Can the employees use the funds for things other than medical expenses?	NO	NO	YES
Can the employee take the money with them if they switch employers?	NO	NO	YES
Do the funds rollover year-to-year?	Generally, NO	NO	YES
Who can contribute to the account?	Employers	Employee	Employer, Employee and/or Individuals

Where Do The Contributions Go

Contributions are 100% tax deductible on your federal tax return in 2007. What is not used in the account each year stays in the account and continues to accumulate interest on a tax-favored basis to supplement retirement just like a traditional IRA, but itýs a Medical IRA... These tax deductions are in addition to any IRA's you currently have and will not affect those plans in any way. Except of course, to lower your tax bill.

Other Advantages Of A HSA Plan

Tax free dollars can be used to virtually pay for all other medical expenses typically not covered under traditional types of health plans like dental, eyeglasses, contact lenses, lasik eye surgery and much more. If you are unemployed or laid off and are collecting State or Federal unemployment insurance, then you can use funds from your Health Savings Account to pay for your health insurance premiums and for your routine health expenses -- All TAX-FREE!

The many other benefits of HSAs will be outlined in detail when we meet for an appointment either by phone, live web cast or in person.

We understand HSAs. We know how to set them up for simplicity. We know how to explain them to our clients.

Please contact us at 877-749-2241 with questions.

Click here for Free Instant Quote - or - Click here for immediate Assistance from Licensed Agent
or Call and speak to an Agent Immediately at 877-749-2241