Health Savings Account Articles

Health Saving Accounts are still available in the age of the Affordable Care Act. The trick is to find an ObamaCare plan that is compatible with HSAs.

Qualified Expenses for an HSA

The great news about having a health savings account is that there are lots of qualified expenses for an HSA. Knowing which procedures and expenses are approved for tax-free withdrawals is important in order to maximize the use and benefit of your HSA account. If you live in California and were to purchase an Anthem Lumenos HSA California Plan this is the overview of coverage and costs.To get an idea of what medical items and services are considered eligible expenses for an HSA, have a look below.  But keep in mind that this an example of what is included, not an exhaustive list.

Qualified Expenses for an HSA:  A Sample List

  * Abdominal supports
  * Abortion
  * Treatment for alcoholism
  * Supports for arches
  * Obstetrician
  * Metabolism tests
  * Costs associated with operating room
  * Optician services
  * Outpatient care lodging
  * Neurologist
  * Legal expenses
  * Lab tests
  * Ambulance fees
  * Acupuncture
  * Artificial limbs
  * Blood transfusions
  * Braces
  * Cardiographs
  * Blood tests
  * Orthopedic shoes
  * Oral surgery
  * Nursing
  * Osteopath
  * Prescription birth control pills
  * Optometrist
  * Removal of lead based paint
  * Transplantation of organs
  * Spinal fluid test
  * Radium therapy
  * Handicapped schools
  * Registered nurse
  * Splints
  * Psychologist
  * Splints
  * Prescription drugs
  * Diathermy
  * Elastic hose
  * Eyeglasses
  * Therapy for drug addiction
  * Diagnostic fees
  * Dentures
  * Dermatologist
  * Crutches
  * Contact lenses
  * Christian science practitioner
  * Sterilization
  * Fluoridation unit
  * Surgeon
  * Therapy equipment
  * UV ray treatment
  * Guide dog
  * Treatment for gums
  * Health care transportation expenses
  * X rays
  * Insulin treatments
  * Wheelchair
  * Hydrotherapy
  * Hearing aids

Again, these are only some of the health care expenses that are covered.  Others can be found by visiting the IRS website.

Click here to see HSA contribution limitations.

How Does an HSA Work?

To take advantage of the flexibility, cost savings and tax advantages of an HSA, the first thing you must do is purchase an HSA-qualified insurance policy called a “high deductible health plan” or HDHP.  The HSA and HDHP must always go together—they were designed by Congress to work as a pair.  The upside of the high deductible part of the HDHP is that it generally makes your monthly premiums cheaper.

Next, when you have your HDHP policy started, you can then set up the actual health savings account at any financial institution that is qualified—usually a bank or investment firm. This is much like opening an IRA. You can choose a standard savings-type account, or can invest in bonds, stocks, or mutual funds if you like.

Once the HSA account is set up, you will receive an HSA debit card and/or checks.  The HSA debit card is often branded with a VISA, Master Card or other such logo, making is easy to use in a variety of payment and purchasing settings.  You can then start to use the HSA debit card on eligible expenses for an HSA.  As long as the expenses are qualified, they remain tax-free. For more information call 800-930-7956 or click here to get an HSA quote.


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HSA Health Account

HSA health accounts are more commonly known as health savings accounts or simply HSAs. HSAs function only in partnership with a specific type of health insurance plan called a High Deductible Health Plan. The two products—the HSA and the HDHP— combine to function as one health insurance distribution and payment plan. Together they create an affordable product with additional benefits for the consumer that extend beyond what is typically offered by a traditional health insurance plan alone.

The HSA/HDHP duo was created by an act of Congress. It replaced the medical savings account and started with the Medicare Prescription Drug, Improvements and Modernization Act that was passed into law on December 8, 2003.

HSA Minimum and Maximum Limits

There are specific amounts that you can contribute to your HSA each year.
2016 HSA Limits

HSA 2016 Limits
Deductible $1,300/$2,600 (ind/fam)
Contribution $3,350/$6,750 (ind/fam)
Max Out of Pocket $6,550/$13,100 (ind/fam)

2015 HSA Limits

HSA 2015 Limits
Deductible $1,300/$2,600 (ind/fam)
Contribution $3,350/$6,650 (ind/fam)
Max Out of Pocket $6,450/$12,900 (ind/fam)

Growing Money Tax-Free with an HSA Health Account

The best part about an HSA is that if you have a healthy year and don’t spend all the money in the account, it transfers to the next year. It is your money to keep and the total amount in your account can keep growing, year after year—it is the annual contributions that are capped, not the total amount in the account. So unlike other, lower deductible plans, you get to keep any savings and you get to control how you want your insurance money spent. Don’t confuse this plan with health reimbursement plans where you lose it at the end of the year if you don’t use it. It’s yours forever and can transfer to your family if there’s a balance when you pass.

The money in your HSA health account, like any health premium, is tax deductible and the money in the HSA grows tax-free as long as you use it only to pay for medical expenses. If you remove or use any funds for non-medical expenses and you’re younger than 59 A,A?, you’ll pay a federal tax penalty.

The HSA is Flexible

The tax code allows you to use your HSA money for such diverse items as dental treatment, alternative medicine like acupuncture, and some over-the-counter remedies. However, your insurance company that carries the high deductible health plan may not recognize these payments toward your deductible if they don’t allow payment for them in their plan.  See our page on HSA Qualified Expenses to get an idea of what you can spend your HSA dollars on.  Because the list of HSA qualified expenses is fairly diverse, you may not need a separate prescription drug plan, dental, or vision care plan, which is another way that having an HSA can save you money on health insurance premiums.

The health savings account is one of the best opportunities to save money on health insurance if your medical bills don’t normally meet your deductible amount each year. The high deductible plan often has a very inexpensive premium that saves money. For healthy individuals and families, the savings you achieve will often more than cover the amount of money a plan with a lower deductible would pay.  For more information call 800-930-7956 or click here for a Health Savings Account (HSA) quote.

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How ObamaCare Deals with HSA Plans and Your Children

As you may have heard HSAs are here to stay, even with the new Affordable Care Act plans. But what does this mean for you children? Well, even though the new HSA plans must meet all the rest of the ACA rules, there is one that can affect your children.

Children and HSAs

Per the ACA all children up to 26 are able to stay on their parents’ health plan, however this does NOT apply to HSAs. Why, you may ask. It’s because HSAs are a tax thing, therefore the IRS still has jurisdiction and the IRS has not updated its age limit for a dependent.

IRS HSA rules for Dependents

If a person can’t claim their child as a dependent they can’t use their HSA funds to pay for them. The following is the IRS definition of who qualifies:

  • Resides in the same place as the covered employee for more than one-half of the taxable year.
  • The child has not provided more than half of his or her own support during the taxable year.
  • Is not yet 19 (or, if a student, not yet 24) at the end of the tax year.
  • Child is permanently and totally disabled
  • Could be biological child, adopted, stepchild, sibling, stepsibling, or descendant of
  • HSAs have Contribution Limits

    There are very specific guidelines and rules for HSA contributions each year. Even though there are specific guidelines you will always want to check with your individual plan for any other rules or limitations that may apply (such as a higher deductible than the HSA min deductible).

    To learn about plans available now for your dependent or to enroll in a new ACA plan call 800-930-7956 or contact Medicoverage.

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    HSA Bank Account: Saving Health Insurance Dollars

    An HSA Bank Account can Save you Money

    An HSA bank account in combination with a high deductible health plan (HDHP) is one of the savviest new forms of health insurance. Congress gave the American public an opportunity to save money while still getting excellent health insurance when they passed the bill allowing for the Health Savings Account (HSA).

    Traditional health insurance costs thousands of dollars in premiums every year. Many healthy insured don’t receive much benefit from those plans, or not enough to cover the cost of high premiums. HSA-qualified HDHPs, however, have high deductibles but relatively lower premiums. The trade-off they do require higher out-of-pocket expenditures up front. Most people fear that they won’t have the funds available if they should have an accident or become ill and require expensive medical treatments. If you were to purchase an Anthem Lumenos HSA Connecticut this is an overview and explanation of costs and coverage.

    The HSA/HDHP combo, however eliminates the subscriber’s exposure to such catastrophic risk because once the individual or family has met their deductible, the insurance company kicks in its payments. So for run-of-the mill doctor’s appointments and prescription medications, you’ll generally foot the bill, but if things go really wrong, the insurance company takes on that financial risk.  The great part is that if you and your family have a healthy year and don’t use the money you’ve socked away in your HSA bank account, it just rolls over to the next year, tax-free. And it can keep growing and growing, year after healthy year.

    Setting up an HSA Bank Account

    Once you enroll in an HSA-qualifying HDHP health insurance plan, you can then set up your HSA.  You can do this at major banks like Bank of American and Wells Fargo, or use the bank associated with your health insurance plan. Once the plan is set up, you usually receive a debit card and checks just as you would for any normal checking account. You can use the money in the account to pay for your medical expenses that go toward satisfying your health insurance deductible.

    Additionally you can also draw upon the account for more types of expenses than your high deductible plan allows. If you need eyeglasses or dental work, services health insurance policies don’t usually cover; you can use the funds from the HSA and still maintain the tax-free status for those funds. Of course, these cost do not apply toward the deductible on your health plan.

    When selecting an HSA savings account, you should make sure to check their fees and interest rate. We have found that currently the interest rates on most HSAs are low but you should be able to select a plan that will offset any banking fees.

    HSA Bank Account Restrictions

    HSA savings accounts do have some restrictions. For instance, in the year 2010, individuals under the age of 55 can contribute a maximum of $3,050 to the an individual HSA. Families can contribute up to $6,150 to a family HSA. However, if you’re 55 or older, you can to add an additional $1,000 to the account every year as a catch-up provision of the plan. Even if you start the plan later in the tax year, you can still contribute the full amount as long as your coverage began the first day of the last month of your taxable year. If you’re like most people and use the calendar tax year, that date would be December 1.

    HSA Out of Pocket Maximums and Minimum Deductibles

    There are also some rules that apply to the HDHPs that must be enrolled in alongside the HSA bank accounts.  Those are the out-of-pocket maximums and the minimum deductible.  The maximum out-of-pocket expense, including deductibles, that participants can be required to pay is $5,950 for individual coverage, and $11,900 for family coverage.

    The minimum deductible of the high-deductible health insurance plan to which HSAs must be linked is $1,200 for single coverage and $2,400 for family coverage.

    Remember, if you don’t use the money in the account, it rolls over to the following year for later use.  It’s yours to keep forever. Even if you pass away, your heirs receive the funds. If you go on Medicare, you no longer can contribute to the HSA. However, you still can use the remaining funds for medical purposes. The premium on long-term care insurance is one of the options allowed. Eye glasses, alternative medical procedures and even payments for vitamins all qualify as medical expenses.  Have a look at our HSA Expenses page to get an idea of all the things you can pay for with an HSA bank account.

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