As health care costs continue to rise, innovative insurance solutions that provide maximum flexibility and choice at minimum cost have become more common. HSA plans are one of the most popular new options, combining a pre-tax health savings account with catastrophic insurance coverage that kicks in after a high deductible of the member’s choice is met.
Members contribute to the HSA account through payroll deduction or directly, and then manage their own care by withdrawing funds as necessary to pay for doctor visits, prescriptions, tests, and other medical services. Insurance coverage kicks in at a predetermined threshold to help with serious illness, hospitalization, or catastrophe.
HSA Health Plan Advantages
HSA Plans cost much less than Preferred Provider Organization (PPO) or Health Management Organizations (HMO) plans, and they are especially popular among younger, healthier workers who access routine care or an infrequent basis yet still need coverage for unexpected emergencies.
Health Savings Accounts are not taxed and many can be rolled over into the next calendar year if unused; the plan could even be tapped for any reason once the account holder reaches retirement age. In this way, health savings accounts function like an investment as well as a tax savings, often retaining value as a financial asset even if unused. HSA plans allow members to choose their own doctors and manage their own care.
Other HSA Considerations
HSA Plans may not provide the kind of ongoing financial support needed by families with young children or older workers, both of which tend to access routine care and wellness care on a more regular basis. Members must commit to making regular contributions or else funds will not be adequate to pay for medical services as the need arises. Much like Individual Retirement Accounts (IRA’s) and 401K plans, HSA funds are taxable at 10% if used for non-medical needs before retirement, and other penalties may apply.
How to Find an HSA Plan
Most major health insurance companies now offer HSA Plans, but options are varied and differ significantly from plan to plan. When choosing an HSA, read the terms carefully and make ask about ownership of the savings account, whether it rolls over and how the account is structured. HSA Plans almost always have high deductibles, but covered services after the deductible is met may also vary widely.
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