What is an HSA? What is a health savings account? Is it insurance or a bank account?
The answer is it is kind of both. Technically, an HSA or Health Savings Account is a bank account that you open at a financial institution in your name with your money. Like any other account money only comes out and goes in to the account per your instructions. Many health insurance companies use HSA in the plan name to identify that it is a qualified or HSA eligible plan. In order to open a Health Savings Account you have to meet eligibility requirements set by the IRS. Those requirements are that you are enrolled in a qualified high deductible health plan – HDHP. You can also check wikipedia’s answer here.
HSA’s give you, the consumer, more control over how your healthcare dollars are spent. A higher deductible means that you will be paying for more of your medical expenses out of your own pocket. It also means that you will be paying a lower premium. Remember that new healthcare reforms laws require insurance companies to pay for many preventative services” with no cost sharing. Of course the cost of these services is part of our premium so you might as well use them. It is still a comprehensive health plan you just have a higher deductible. I recommend the 100% co-insurance plans with the highest deductible you can stand. The great thing about them is that once you meet the deductible the insurance company pays 100% of your covered expenses for the rest of the calendar year.
What are the Pro’s and Con’s of an HSA?
Pro’s:
- Low Premium
- Comprehensive Insurance
- Great Tax Benefits
- Network prices for Medical Care
- Preventative Care is covered in accordance with the PPACA
Con’s:
- High Deductible means you’ll pay more when the time comes.
In the long run a Health Savings accounts is much more cost effective than most of the traditional health plans available on the market today.
What is a Qualified High Deductible Health Plan and what are the limits for 2011 – the obvious part is that you have to have a high deductible, at least $1,200 / year for an individual and at least $2,400 for a family. There must maximum limit of the deductible and coinsurance on medical expenses, a annual maximum out-of-pocket: $5,950 for an individual, and $11,900 for a family. These limits are for IN network services…if you go out of network you will pay a lot more. Contributions into your account are limited to $3,050 for an individual and $6,150 for a family. In 2012 the contribution limit for individuals is $3,100, and $6,250 for a family. For more details please refer to The Department of the Treasury Internal Revenue Service publication 969 at http://www.irs.gov.
Who has the best health savings account eligible health plans? I’ve switched my HSA couple of times. The network and the price are the most important factors for me, so I wanted to be sure I was with a good company, a great network, and had a low premium. I have a $5,000 deductible 100% coinsurance POS plan with Aetna. I will be switching to a Cigna HSA very soon simply because my premium will be $500 lower per month. Insurance is expensive and rates are regulated so don’t expect any miracles…just be smart about how you spend your money.
HSA Eligibility – for starters you have to be insured by a qualified HSA eligible high deductible health plan. Most health insurance carriers offer a qualified plan. It is usually best to go with with if the larger insurance companies. The insurance coverage is about the same with each of ht carriers but the larger one s have better networks (more about networks later) and better prices. Local insurers are still worth looking at because they can and do offer competitive products. If you have an HSA you can’t have any other health insurance or Medicare insurance…but there are some additional insurance products you can have. Indemnity products that pay a fixed amount per day or for hospitalization, accident insurance, long and or short term disability, long term care insurance, and dental insurance.