Health Savings Accounts (HSAs) are very popular. Since its inception in 2004, approximately 2.5 million Americans have signed up for these so-called consumer-centric health plans. Unfortunately, HSA plans are not for everyone.
Here are some tips to help you determine if HSA is right for you and your family.
- An HSA plan can cut healthcare costs by an average of 40% for many people.
However, some people won’t see any net savings. Those who are likely to understand the great savings are those who all pay their own insurance premiums, such as the self-employed, who are relatively healthy with little medical expenses.
- The health savings plan restores freedom of choice.
An HSA plan provides that individual consumers receive their own health care. It also means that each individual should be empowered to make their own decisions about health care. This approach to self-reliance is not always fashionable or suitable for everyone, especially those familiar with HMO-like “co-payment plans”.
- Health savings accounts for lower income taxes.
Every dollar deposited into your HSA account will be deducted from your taxable income in the same way as contributions to a standard IRA account, whether you spend it or reserve it. Interest and capital income during an HSA are tax-deferred as with a standard IRA. Unlike an IRA, withdrawals are tax-free when it is customary to pay eligible medical expenses. In many situations, new account holders are willing to fund their HSA almost entirely with money saved from the rewards of a more expensive previous plan. By storing all or most of these savings in an HSA, the account holder gets additional instant savings through lower taxes.
- You want to have an appropriate, highly qualified insurance policy in advance
You can open a healthy bank account. One of the biggest misconceptions about HSA plans is that any policy with a high deductible allows the policyholder to designate an HSA account. However, IRS regulations are very specific. Not all policies with a so-called “high deductible” are sufficient. It is important to make sure that you are simply insured under a properly qualified policy. It is best to work with a professional and properly licensed insurance broker who has experience marketing properly qualified HSA plans.
- You want to be insurable in order to be eligible for the qualified HSA insurance policy.
Since most people do not have a properly qualified high deductible policy, they will need to change their insurance plan to be eligible for the HSA. If there is no insurance cover under the small group reform laws (general groups of 2 to 49 employees), the new policy with a high deductible will be taken out individually by an insurance company. This suggests that some “pre-existing” conditions may not be fully covered. In addition, some companies may prefer to cover certain “pre-existing” conditions for slightly higher premiums. Unfortunately, certain health conditions simply make a person uninsurable (examples: diabetes, chronic illness, stroke, etc.). Subscription requirements vary from state to state. That is more of a reason to believe than a qualified health plan broker.
You shouldn’t switch to an HSA plan if managing existing medical bills is more important than saving on health insurance premiums. Don’t change your health plans: in the middle of ongoing medical treatments; after diagnosing a serious health problem; or when a loved one is pregnant.
It is generally relatively easy to qualify. H. No medical examination, etc. Most insurance companies that offer HSA coverage will provide informed answers to your question, possibly in a follow-up interview. Medical records may also be requested in certain cases and companies always reserve the right to order a paramedical examination.
- Although HSA insurance premiums are low, they are not always as low as you might expect.
It does this for a primary reason. Put simply, the underlying policy is just that – an insurance policy. This is a “high” deductible as required by law