Widely publicized before they were available, Health Savings Accounts (HSAs) are quickly becoming an accepted health insurance option.
We recently introduced a new HSA, Protect 2500, once you meet the plan deductible, the plan pays 100% of in-network, eligible expenses.
Consider these guidelines whether you’re interested in an HSA for yourself, an alternative plan for employees, or when consulting clients on how an HSA might serve them.
1. You can’t open an HSA without subscribing to a high deductible healthcare plan (HDHP), but you can subscribe to an HDHP without opening an HSA.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 stipulated that HSAs were created to allow individuals to pay for qualified medical expenses with pre-tax dollars in conjunction with specially designed HDHPs. Getting HDHP coverage without opening an HSA is possible. However, keep in mind that this option fails to take advantage of HSA tax benefits while exposing subscribers to the risk of paying the very high deductibles out of ordinary savings should they need expensive medical treatment.
2. Before deciding on an institution to act as trustee or custodian, research your investment options and the account fees.
HSAs are administered by insured banks and credit unions. Though not all that qualify are currently offering HSA services, any bank, credit union or any other entity that currently meets the IRS standards for being a trustee or custodian for an IRA or Archer Medical Savings Account (MSA) can be an HSA trustee or custodian. The law also allows insurance companies to be serve in this role.
The Group Insurance Trust has made access to Health Savings Accounts through Mellon Bank available to ProtectPlus HSA subscribers. Names of other institutions in California and throughout the U.S.can be found here.
3. As an employee, when comparing an HDHP with traditional copay plans, consider the amount your employer will contribute to your HSA.
Contributions made by your employer are excluded from your income and, therefore, are not currently taxable to you. Your own contributions provide an above-the-line deduction that allows you to reduce your taxable income by the amount you contribute to your HSA.