What is an H.S.A. Health Insurance plan?

May 5, 2009 - PRLog -- Understanding the differences between each health plan is important before deciding which plan is best for you or your family.  It’s difficult just to figure out which deductible amount to choose or whether to pay extra for a fixed doctor copay or not.  Now there is a fairly new type of plan that is compatible with a Health Savings Account or HSA for short.

A Health Savings Account can be set up and utilized in conjunction with an HSA compatible health  insurance plan.  However, setting up a health savings account is not mandatory and is separate and apart from the insurance plan issued by the insurance company.  Banks offer, set up and administer the Health Savings Account.  Some insurance companies have agreements with banks who offer Health Savings Accounts and give you the option of signing up during the application process.  

It is important to know, you can use ANY bank of your choosing for your Health Savings Account.  Insurance companies cannot dictate which bank you use.  Before choosing a bank, be sure to research fees and interest rates as they can vary greatly from bank to bank.

Health Savings Accounts function similar to an IRA.  Both are tax deferred savings accounts and both can be used to supplement your retirement.  The difference is the way funds are taxed.  With an HSA, any funds withdrawn for the purpose of qualified medical expenses become tax free.

An HSA compatible plan can be very different from a PPO plan or can also be very similar.  All HSA plans and some PPO plans have a deductible which all covered medical services are subject and no copays for doctor visits or emergency room services.  Both PPO and HSA plans will offer a coinsurance percentage of coverage after the deductible has been met.  These percentages of coverage can be anything from 100% to 50% depending on the plan and whether you utilize in network or out of network provider.

HSA plans have one main unique feature.  All plans have ONE single deductible which needs to be met before any coverage applies.  Everything goes towards the deductible, including pharmacy benefits, if provided.  In the case of a single person being covered it is one single deductible.  But if you are covering a family, it is still one single family deductible whether you are covering two or ten family members.  For a PPO family plan you have individual deductibles that apply to each family member AND a family deductible that caps the annual deductible amounts to two or three times the individual deductibles.

HSA deductible amounts are set by the government and can change year to year.  The single deductible options are lower than the family deductible options.  As of 2009 the minimum single deductible is $1,150 and maximum is $2,300 for family.  The maximum out of pocket amounts are $5,800 for single and $11,600 for family.  The maximum out of pocket includes deductible and coinsurance amounts.

The maximum contributions to the Health Savings Account are also set by the government.  As of 2009, the maximum contribution amount for a single individual is $3,000 and $5,950 for families.  There is also a catch up provision for those 55 years and older which allows an extra $1,000 contribution each year.

As always, be sure to keep your current coverage in place until a reputable company has approved your application and offered you acceptable coverage and premium.

If you would like to obtain online quotes and professional advise for individual or family coverage, please visit http://www.advanced-benefits.com.

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