High Deductible Health Plans (HDHP), used in conjunction with a Health Savings Account (HSA), help you take control of your healthcare dollars. With HSA plans, you combine healthcare coverage with the ability to develop equity through a tax-advantaged savings account.
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High Deductible Health Plan
Your HealthSave plan is the HDHP insurance component of this arrangement. In order for you to properly set up an HSA, your health plan has to be a "qualified" HDHP that includes, but is not limited to, the following characteristics:As the name implies, deductibles for qualified HDHPs are higher than many other plans. If you have unexpectedly high medical expenses during the year, your HDHP will be a safety net to provide medical coverage for you and your family.
Health Savings Account
The HSA is a tax-advantaged account used to pay medical expenses funded by contributions from you on a pre-tax basis. Money can be withdrawn from the HSA to pay for qualified medical expenses.
By selecting a HealthSave plan, subscribers are eligible to set up an HSA provided they meet the following qualifications:
- Not also covered by any other health plan that is not an HDHP (with exceptions for plans providing certain limited types of coverage such as accident or specific disease policies, etc) and;
- Not entitled to benefits under Medicare and;
- May not be claimed as a dependent on another person's tax return.
How HealthSave Works With Your HSA
Here are some of the general components for using your HSA.
- Set up an HSA with your HSA vendor.
- Contribute to your HSA up to specified limits on a pre-tax basis.
- The money in the HSA account can be used to pay your deductible or coinsurance amounts until you reach your out-of-pocket maximum.
- If you do not use the money in the account, it rolls over to the next year and continues to build.
- This is your money to use as you wish. However, if this money is not used for qualified medical expenses, it will be subject to income tax plus a ten percent penalty before the age of 65. After age 65, this money is treated as retirement income and if not used for qualified medical expenses, is only subject to income tax without the penalty.
