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Health Savings Accounts (HSA) HSA - Qualified Medical Expenses >> i HSA Description & Overview ( Below ) Is a health savings account right for you? Paired with a high-deductible medical health plan, HSA's deliver security and cost savings and tax-savings. How Does an HSA Work? An HSA consists of two parts.
Both the 'HSA Insurance Plan' and the 'HSA Savings Plan' are refered to as HSAs. But they are two seperate items. With the HSA Savings Plan you pay for minor medical expenses. The HSA Insurance Plan pays for the major medical expenses that exceed the deductible. Deposits to the 'HSA Savings Plan' are 100% tax deductible and can easily be used to pay for medical expenses for the small and routine medical expenses with tax free dollars, until a deductible has been met.
A smart choice The 'Savings side' of HSAs are similar to Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs). Individuals put away money on a tax-deductible basis.
The law requires that an HSA be combined with a high deductible health insurance plan. Typically, this type of plan costs less than traditional coverage because the insurance company doesn't have to process and pay claims for many lower-cost medical expenses incurred. Where do the contributions to the HSA savings plan go? What is not used for medical expenses in the account each year stays in the account and continues to grow interest on a tax favored basis to supplement retirement just like a traditional IRA, but its a Medical IRA... These tax deductions are in addition to any IRA's you currently have and will not effect those plans in any way. Except of course, to lower your tax bill. | |||
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Larger medical expenses are covered by a low cost health insurance policy. How do I save money on my medical bills? When an HSA savings plan is combined with a higher deductible, HSA qualified health plan (required) then the HSA and the insurance policy is meant to replace a higher cost, more restrictive, traditional health insurance plan. Traditional health plans with co-pays are typically 30 to 50% 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. How does it Work? Take the premiums you currently spend on a high cost traditional individual or group plan and split it into 2 parts. One part will go to pay for the high deductible health insurance plan and the other part is a tax-favored savings account used to pay out of pocket medical expenses. Then you would use the amount you choose to fund the medical IRA (HSA savings plan). There is complete flexibility on where the saved part of the premium goes. The savings placed in the medical IRA can be used for the small medical expenses until the deductible is met. Should the need arise for a larger medical expense then the higher deductible health plan would kick in and limit the out of pocket expenses to the deductible each year. 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. So, all covered medical expenses for the entire family apply to one deductible. How many deductibles are there? No more deductibles for each family member. There is only one deductible for the entire family when 2 or more people are covered on the same plan. What else can the HSA be used for? Tax free dollars can also be used to virtually pay for all other medical expenses typically not covered under traditional types of health plans like dental, eyeglasses, contact lenses, lasic eye surgery and much more. Click here to see examples of both Qualified Medical Expenses and Non-Qualified Medical expenses. The many other benefits to the HSA's are outlined in detail when we talk with you and answer your questions. We understand HSA's. We know how to set them up for simplicity. We know how to explain them to our clients. | ||
