What is a Health Savings Account?

As a licensed health insurance agent, I speak to clients every day who are very frustrated with their health insurance options (or lack of such). The vast majority of my self-employed and small business owner clients find some relief in an HSA-eligible plan.

The basic idea is that you reduce health insurance premiums by choosing a plan that has a high deductible - for instance, $3200-$5700 for the whole family. With many plans, you can choose to have it pay 100% of covered expenses after meeting the deductible, and the entire family's medical bills go toward meeting that ONE deductible, as opposed to each family member having to meet separate deductibles. When you crunch the numbers, you often find that the out-of-pocket limits are roughly the same! By doing away with co-pays, coinsurance, etc, you can reduce the costs, often saving hundreds of dollars per month on a family plan.

The next step is being prepared to meet that deductible. In order to address this, the idea is to start putting that savings into an account called a Health Savings Account (HSA). This functions outside the health insurance plan, and is a tax advantaged account. This means that you can take an 'above-the-line' tax deduction for the money that you put into the account (up to $2850 for an individual or $5650 for a family in 2008) and you also do not have to pay taxes on any interest the account earns. You don't lose the money at the end of the year either - so if you stay healthy, it's still your money.  A Hight Deductible Plan coupled with a Health Savings Account is an affordable way to insure your family.  Contact us for more information and quotes.