It all starts with a high deductible health plan…
High deductible health plans are increasing steadily in popularity among small to medium size employers. HDHP’s allow lower employee premiums and subsequently lower employer contributions which help the bottom line. But does it really? High deductible health plans include preventative care but must not provide any benefit benefit beyond that.
When you are reviewing your benefit options look for these descriptions to know if the plan is Health Savings Account eligible:
- Plan ‘X’ Deductible (of over $1350 Individual or $2700 Family) ‘X”% HSA
- Plan benefits include preventative care at 100%
- The plan will only pay benefit for office visits, lab services, prescription medications and other medical services that are not preventative after the deductible is met 100%
- There are NO COPAYS listed or included on the summary of benefits (this is a main indicator of if a plan is or is not HSA compatible – copays are not allowed on an HSA qualifying medical plan)
If my plan is HSA compatible how do I set up the account?
Employers have the option of providing HSA’s as part of an employee’s benefits package. The HSA has the option to include a contribution by the employer but is not required. Any funds that are contributed to the HSA by the employer and employee are fully vested and available to the employee if employment is terminated. HSA contributions are made on a pre-tax basis when deducted via payroll and provide a decreased total taxable income at year end for income tax purposes.
Individuals are also able to set up HSA accounts separate from an employer as long as a qualifying High Deductible Health Plan is in place. The HDHP can be purchased on any state health insurance exchange marketplace or through a licensed broker if the individual does not qualify for an income subsidy.
Among the top HSA Providers in the country are companies like:
- Optum Bank
- Fidelity Investments
- And Many More!
What is an HSA Qualifying Expense?
The complicated but thorough explination of what is a qualified expense can be found online through the IRS. Here is the link: http://www.irs.gov/pub/irs-pdf/p502.pdf
You may be surprised at some but comforted by other expenses that are HSA eligible. Here are some notable covered expenses:
- Psychiatric Care
- Disabled Dependent Care Expenses
- Fertility Treatment
- Dental Treatments and Procedures
- Nursing Services
- Weight-Loss Programs
- Quit Smoking Programs
On the other hand here are excluded expenses:
- Babysitting Services for healthy children or family
- Hair removal or hair replacement services
- Maternity clothing
- Medicines and drugs from other countries
- Health Club dues or fees
- Funeral expenses
Health Savings Accounts are great tools to save for the unexpected. They never expire and can in specific situations be rolled over into other investment or retirement accounts in the future. The tax savings add up quickly and depending on the HSA carrier there are interest and investment options available. Depending on the type of HSA it may also be FDIC insured up to a specific account value.
If you work for a small employer ask your HR department to consider offering a Health Savings Account through their benefits package. The administration is simple but to many the thought of adding one more bill or action to their lives means the account will never be opened, utilized or appreciated. Only when catastrophe strikes will you wish your deductible was partially or fully saved for.
As a broker I always offer Section 125 Cafeteria Plans along with a Health Savings Account or Health Reimbursement Account to round out benefits packages for my small and large employers. Value added accounts such as these provide stability and increase longevity of employment. Whether you are an individual or a company or only reading my blog to find out what an HSA is I hope you find it meaningful. Review your HSA contribution balance or open your own HSA today!
Find my contact information under the Contact tab. I look forward to hearing from you to set up your HSA!