Health Savings Account
Making Health Insurance More Affordable

Health Savings Account (HSA) is a relatively new way of paying for your health care expenses to give you more sumers more freedom in your health care choices and help you save on health care costs.

This section will help you find answers to your questions on Health Savings Accounts, and show you where you can find an HSA plan that's right for you.

What is a Health Savings Account?

There are certain advantages to putting money into these accounts, including favorable tax treatment.

Since its implementation, Health Savings Account seems to be gaining traction. Here are other clear indicators of the growing interest on HSA and its impact on individuals and employers.

• Over 1.5 million Americans are reported to be enrolled in HSA and continues to attract individuals and small business employers who are looking to reduce health care costs.
• A recent survey by Mercer Human Resource Consulting of nearly 1,000 employers shows almost three-quarters expect to offer HSAs by 2006.
• eHealthInsurance reports that a third of HSA policies sold through its Web site have been to the previously uninsured, so they seem to be reducing the number of the uninsured. In addition, HSA-eligible plans are being adopted by all income levels; 40% of HSA-eligible plans were purchased by people incomes of $50,000 or below.
• Golden Rule, one of the early providers of HSA reports that its customers – primarily self-employed men and women, families with children and early retirees -- have already accumulated over $ 116 million in tax-advantaged savings accounts.
• Industry experts predict that 20 million people will be enrolled in HSA within five years.

What are the benefits of Health Savings Account?

Security – Your high deductible insurance and HSA protect you against high or unexpected medical bills.

Affordability – You should be able to lower your health insurance premiums by switching to health insurance coverage with a higher deductible. Premiums for HSA-eligible policies are 45 – 55% less than traditional plans.

Flexibility – You can use the funds in your account to pay for current medical expenses, including expenses that your insurance may not cover, or save the money in your account for future needs, such as:

• Health insurance or medical expenses if unemployed
• Medical expenses after retirement (before Medicare)
• Out-of-pocket expenses when covered by Medicare
• Long-term care expenses and Insurance

Control – You make all the decisions about:

Portability – Accounts are completely portable, meaning you can keep your HSA even if you change jobs, change your medical coverage, become unemployed, move to another state or change marital status.

Ownership – Funds remain in the account from year to year, just like an IRA. There are no "use it or lose it" rules for HSAs, unlike Flexible Savings Accounts.

Tax Savings – An HSA provides you triple tax savings:

1. tax deductions when you contribute to your account;
2. tax-free earnings through investment; and,
3. tax-free withdrawals for qualified medical expenses.

Who Can Have a Health Savings Account?

• Have coverage under an HSA-qualified "high deductible health plan" (HDHP)
• Have no other first-dollar medical coverage (other types of insurance like specific injury insurance or accident, disability, dental care, vision care, or long-term care insurance are permitted).
• Are not enrolled in Medicare.
• Cannot be claimed as a dependent on someone else’s tax return.

High Deductible Health Plans (HDHPs)

$1,000* -- Self-only coverage
$2,000* -- Family coverage

In addition, annual out-of-pocket expenses under the plan (including deductibles, co-pays, and co-insurance) cannot exceed:

$5,100* -- Self-only coverage
$10,200* -- Family coverage

* Amounts are adjusted annually for inflation.

In general, the deductible must apply to all medical expenses (including prescriptions) covered by the plan. However, plans can pay for "preventive care" services on a first-dollar basis (with or without a co-pay).

"Preventive care" can include routine pre-natal and well-child care, child and adult immunizations, annual physicals, mammograms, pap smears, etc.

Where to Get High-Deductible Health Plan Coverage

You should be able to find a qualified policy by contacting your current insurance company, an agent or broker licensed to sell health insurance in your state or your state insurance department.

Click here to find an HSA plan that's right for you.


To learn more about how you can make contributions to and use a Health Savings Account.

HSA Resources:

www.ustreas.gov/offices/public-affairs/hsa/
www.ehealthinsurance.com
www.goldenrule.com or 1-800-974-4472

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