How an HSA Insurance Plan Works With a Health Savings Account
An HSA Insurance Plan can be summed up in 3 easy steps:
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Lower health plan premiums. Take out a high deductible HSA insurance policy that is properly qualified to work in conjunction with a health savings account. Your monthly premiums will be much lower due to the higher deductible. CAUTION: The policy must meet specific IRS guidelines (see HSA Guidelines link). Our agency represents virtually all of the major A-rated insurers -- just click on the orange "GO" button on the right to get fast, free quotes.
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Tax-savings. Once your HSA insurance policy is in force, you then are eligible to open the actual health savings account at any qualified financial institution (bank, investment firm, etc.). The account is similar to an IRA. Deposits are tax deductible and withdrawals can be made on a tax-free basis to pay for qualifying medical expenses. Annual limits are imposed on the amount contributed. See section below entitled "Etcetera" and links to the right for additional details.
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Supplemental retirement funds. In general, you should be able to fund the account primarily with "extra dollars" you otherwise would be using to pay for a higher cost health plan (with a lower deductible, co-pays, etc.). In addition, a typical family will save about $1,600 a year in taxes by contributiing to their health savings account. Funds left over at year's end "rollover" from year to year and accumulate toward retirement on a tax-favored basis - just like an IRA.
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Etcetera - More HSA Benefits at a Glance:
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Impressive tax-savings -- regardless of whether you itemize. When you file your taxes each year, all of the money you
have deposited into your health savings account will be tax-deductible on line 25, front page,
of your 1040 form (assuming you have qualifying income at least equal to your contribution amount). This will cut your tax bill
by an average of $1,600 for a family (and about $700 for a single), based on a 28% tax bracket. Because of the tax savings, it is absolutely correct to say that with an
HSA insurance plan, you are paying routine medical bills with money you otherwise would have paid in
taxes! How cool is that? (see examples below—you also save money on
the actual bill in most cases)
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Double-discounts. When you visit a physician, you pay with tax-free money
from your health savings account--money you otherwise would have paid in taxes or premiums, for the most part. The account
is easily accessible by debit card or check. If your provider is a member of the PPO discount network you have joined
(through your HSA insurance plan), your bill will actually be reduced before you have to pay it. (example: $120 Dr. visit reduced
to $85. You pay the discounted $85 with tax-free, i.e. discounted dollars from your HSA.)
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Rx savings. When you purchase prescriptions, simply visit a
participating PPO discount pharmacy (most all major chains participate) and pay
your discounted amount on the spot, either by debit card or check directly from
your health savings account (again, with tax-free money).
For greater savings, use the bulk priced Rx mail service.
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Tax-free money for dental, eyewear, etc. Most medical expenses not covered by the underlying HSA insurance policy
may still be considered allowable expenses under the health savings account. For example, dental work, including braces,
vision care, including glasses, eye surgery, alternative therapies such as
acupuncture, etc. can all be paid for with tax-free money from the HSA. Click here for the approved list of IRS-qualified expenses.
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The Super-IRA effect. What you don't use from the health savings account each year is yours to keep. The balance continues to grow and grow on a tax-sheltered, compound basis. Once you reach age 65, the account can basically be used just like a traditional IRA.
Tip: Keep funding the HSA every year to the maximum amount
allowable by year (this amount increases each year, by law). Use "after-tax" dollars to pay routine medical bills. This reduces your taxes each year and allows you to grow your account substantially larger, giving you a larger cushion against unexpected
“catastrophic” type claims in the future, and a larger "pot of gold" for retirement. (Note: If you do opt to dip into your HSA to pay routine medical bills with tax-free dollars, realize that dipping into your HSA savings account is not the same as dipping
into your pockets—your HSA is the functional equivalent of “insurance” coverage
for the small bills—what you don’t have to use is yours to keep. This is in stark contrast to paying an insurance company a few thousand dollars
a year to do virtually the same thing--insure the “small” bills)
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For even more BENEFITS of a health savings account plan, click here: More HSA benefits |
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Here is an easy link to our HSA insurance home page |
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