What is HSA insurance?
HSA insurance, or a health savings account insurance plan, is a savings account that is dedicated for medical expenses – there are restrictions on using your HSA money for non-medical related costs until you are past a certain age. A health savings account is meant to be used in conjunction with a high deductible health insurance policy, which means that you have to qualify for a health insurance plan before you can apply for HSA insurance.
What are the benefits of HSA insurance?
One of the most notable benefits of having a health savings account is that you are eligible for the lowest net cost on your health insurance expenses – this is possible because the account is linked to your high deductible health insurance policy. Essentially, your health insurance policy takes care of all the larger medical expenses, while you are responsible for using the money you deposit into your HSA for the smaller, more affordable bills.
Another great benefit of having an HSA is that any deposits that you make to the account are completely tax deductible, which is an advantage highlighted by WebMD. You can also withdraw the money from your health savings account on a tax-free basis to pay for any medical expenses that are not covered by your policy.
The money in your HSA is easy to access because it can be withdrawn with a debit card or a check, which makes it easy to pay for expenses at the pharmacy or doctor’s office. You are also eligible to save on your prescription purchases, as well – in order to do this you will have to find a participating pharmacy in your area.
Are there any potential disadvantages of HSA insurance that I should be aware of?
In order to qualify for HSA insurance, you are required to have a high deductible health insurance policy. Unfortunately, the minimum deductible that is required on a single coverage policy is not practical for everyone’s situation, making a health savings account impractical for some – the minimum deductible is increased if you have family coverage.
Money used for non-medical related expenses is required to be recorded as part of your gross income at the end of the year – unlike medical expenses, like prescription purchases, these withdrawals do incur sales tax. However, once you pass the age limit of 64, you can use your HSA account for any type of purchase without incurring additional taxes.
Sometimes, it can be difficult to coordinate a new HSA insurance plan with your preexisting policy because there are only specific types of health insurance that are allowed, like disability and long-term insurance – the best way to avoid problems with the transition is to work out all of the details with your employer and insurance company before making the switch.
Another potential disadvantage to opening up a health savings account is that here are also annual limits imposed on the amount of money you can withdraw from your HSA on a yearly basis. The limit imposed on your savings account with largely depend on the amount of money that you contribute – however, the best way to know what kind of limits you will face ahead of time is to talk with a qualified financial institution. In order to decrease the chance of problems down the road, make sure you are fully aware of the terms you are agreeing to before you open up your HSA.
Where can I apply for HSA insurance?
You will need to find a qualified financial institution that has been approved as an HSA administrator – this just means that the IRS has found the institution eligible to offer this type of account. You may have to look around.
What will the health insurance company need to know when I apply for HSA insurance?
In order to qualify for a health savings account, you will need to meet the age and minimum deductible requirements – your high deductible insurance coverage will also need to be under one of the qualified major medical insurance policies, which is determined by the rules set forth by Congress. The insurance company will require disclosure about any preexisting conditions and medications that you currently have when you apply for a policy.
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