What's an HSA? A few basics about Health Savings Accounts
Open enrollment for benefits at your workplace this year may have introduced you to a new acronym: HSA. Health Savings Accounts have been growing in popularity since being introduced in 2003 because they help make health insurance more affordable for more people, said Ellen Laden, spokeswoman for Golden Rule Insurance Co.
Even though more than 6 million people today have health insurance coverage that includes an HSA, many don’t understand what they are, how they work and how they help save on health insurance, Laden said.
According to Golden Rule Insurance Co. and the U.S. Treasury Department Web site:
-- An HSA is similar to a savings account. You deposit money into it to be used for current and future medical expenses.
-- To open one, you must have health insurance coverage through a high-deductible plan. These plans cost less than lower-deductible health plans. But you have a higher deductible, which means you’ll pay more health expenses out of your pocket than with other plans before your health insurance pays.
-- The money you save on premiums because of your higher-deductible plan can be put into an HSA and withdrawn to pay the deductible and other medical expenses not covered by insurance, such as vision, dental care expenses and more. If you don’t use the money to pay those bills now, you keep it to use when you need it. Funds can also be invested, like an IRA.
-- The money in your HSA helps lower your taxes in a few ways: Money in the account can come from your paycheck before taxes, and you don’t have to pay taxes on the funds you withdraw for medical expenses.
-- You own your HSA. It goes where you go, whether you move or change jobs.
-- After age 65, people can withdraw funds from their HSA accounts and use it for things other than medical expenses without penalty, as long as they pay normal income tax on the money, Laden said.
-- Many companies that offer HSAs will make a matching contribution to that account, she said.
“The affordability of the health insurance premium, the tax saving and the control consumers have over their own health care spending are helping to drive the popularity” of HSAs, Laden said.
Lincoln insurance broker Tom Hanthorn said many of his clients are self-employed and self-insured, and 60 percent of his sales are for HSAs.
More employers are offering both traditional health insurance plans and those with HSAs to employees, Hanthorn said. Many find HSAs are a better option, Hanthorn said.
“The difference in premiums is huge,” he said.
Even though HSA plans have a higher deductible, they can be more cost efficient in many cases, Laden said.
With an HSA, she said, “you can have more control knowing how much you’re going to pay for your health care costs.”
Reach Hilary Kindschuh at 473-7120 or hkindschuh@journalstar.com.
Even though more than 6 million people today have health insurance coverage that includes an HSA, many don’t understand what they are, how they work and how they help save on health insurance, Laden said.
According to Golden Rule Insurance Co. and the U.S. Treasury Department Web site:
-- An HSA is similar to a savings account. You deposit money into it to be used for current and future medical expenses.
-- To open one, you must have health insurance coverage through a high-deductible plan. These plans cost less than lower-deductible health plans. But you have a higher deductible, which means you’ll pay more health expenses out of your pocket than with other plans before your health insurance pays.
-- The money you save on premiums because of your higher-deductible plan can be put into an HSA and withdrawn to pay the deductible and other medical expenses not covered by insurance, such as vision, dental care expenses and more. If you don’t use the money to pay those bills now, you keep it to use when you need it. Funds can also be invested, like an IRA.
-- The money in your HSA helps lower your taxes in a few ways: Money in the account can come from your paycheck before taxes, and you don’t have to pay taxes on the funds you withdraw for medical expenses.
-- You own your HSA. It goes where you go, whether you move or change jobs.
-- After age 65, people can withdraw funds from their HSA accounts and use it for things other than medical expenses without penalty, as long as they pay normal income tax on the money, Laden said.
-- Many companies that offer HSAs will make a matching contribution to that account, she said.
“The affordability of the health insurance premium, the tax saving and the control consumers have over their own health care spending are helping to drive the popularity” of HSAs, Laden said.
Lincoln insurance broker Tom Hanthorn said many of his clients are self-employed and self-insured, and 60 percent of his sales are for HSAs.
More employers are offering both traditional health insurance plans and those with HSAs to employees, Hanthorn said. Many find HSAs are a better option, Hanthorn said.
“The difference in premiums is huge,” he said.
Even though HSA plans have a higher deductible, they can be more cost efficient in many cases, Laden said.
With an HSA, she said, “you can have more control knowing how much you’re going to pay for your health care costs.”
Reach Hilary Kindschuh at 473-7120 or hkindschuh@journalstar.com.
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