Health Savings Accounts are a new and exciting way for Americans to save on insurance costs and at the same time potentially save for the future.
As Americans continue to struggle with rising health care costs, Health Savings Accounts or HSA's are increasingly being used as an affordable solution. It's estimated that more than 6 million Americans are now covered by HSA plans with forecasts by the Treasury Department of 25-30 million subscribers by 2010. HSA plans have two primary components – health insurance coverage and an actual tax-advantaged savings account. You can use the money in the savings account to pay for your current health expenses, but you also own and control the money in the account regardless of whether your health coverage changes or you move to another city. So, HSAs offer an opportunity to build tax-advantaged savings for current and future health care expenses.
With HSA plans you can put the money you save on your premiums into your tax-advantaged savings account to build interest, whereas with a traditional plan, more money is spent on premiums regardless of how much health care you actually use like co-pays, co-insurance, etc.
Do some comparative shopping, evaluating the elements associated with each plan option. Traditional plans may include: higher monthly premiums, a smaller deductible, as well as co pays and/or coinsurance. HSA plans may include: lower monthly premiums and a higher deductible. So depending on your health care needs, a high-deductible plan may very well cost less overall than repeatedly paying a traditional plan’s co pays and coinsurance.
HSAs let you roll over your unused dollars from one year to the next, so you don’t have to worry about ever forfeiting your money.
For 2008 HSA holders can choose to save up to $2,900 for an individual and $5,800 for a family (HSA holders 55 and older get to save an extra $900 which means $3,800 for an individual and $6,700 for a family) – and these contributions are 100% tax deductible from gross income.
Minimum annual deductibles are $1,100 for self-only coverage or $2,200 for family coverage. Annual out-of-pocket expenses (deductibles, co-payments and other amounts, but not premiums) cannot exceed $5,600 for self-only coverage and $11,200 for family coverage.
Greg Palmer is President/CEO of GPI Financial Services and a member of the Atlanta Association of Health Underwriters.
