A new concept to health insurance was approved buy the United States Congress in 2003. This new health insurance program allows you to purchase a federally qualified high deductible health insurance policy and along with that open a separate medical IRA savings account. This new health insurance plan is called a Health Savings Account (HSA).

The concept is rather simple. The consumer selects a health insurance policy with a high deductible, most times around $6000 for a family, and then opens an IRA account that can be funded up to their deductible amount. There are limits set by the federal government on the contribution maximums however it hovers around $6000 for a family and about $3000 for a single individual. These amounts change yearly so check with your broker or agent at the time of application. The concept continues by allowing the HSA member to pay for medical expenses from their IRA account, which allows medical deductions to be paid with pre-tax dollars. There is also no penalty for withdrawing the funds, so long as they are for medical expenses as approved by the federal government.

The medical IRA, which can be opened at several online banks like HSA Bank, as well as local retail banks throughout the US, allows any unused funds to roll over every year. The HSA allows the health insurance consumers to withdraw dollars for things like doctor visits, prescription drugs and dental procedures by using a debit card or check book provided by most HSA banks. The allowed list of medical withdrawals is provided by the Internal Revenue Service.

In regards to the medical plan portion of the Health Savings Account concept the health insurance consumer would select a federally qualified high deductible health insurance plan. The plan MUST be a federally qualified plan, not just any high deductible plan. These family health insurance plans offer a single yearly deductible for the entire family, not a deductible per person like many other plans. Also, most of the HSA high deductible plans we write pay benefits at 100% after the deductible, although a few still operate with the coinsurance platform. Unlike the traditional doctor co pay plans the HSA policy applies doctor visits and prescription drugs to the yearly family deductible so those expenses can be withdrawn from the IRA portion of the policy.

The HSA program does offer less out of pocket expenses than most traditional  doctor co pay plans if a family has a catastrophic medical event in any year simply because after the deductible is met no additional family members have any expenses to meet. However, the family with a more normal expense year of just a few doctor visits or a family that does not fund their HSA IRA may see the program as not benefiting them because of the additional out of pocket expenses up until the deductible is met.

A rather new addition to some qualified high deductible health plans is the inclusion of first dollar preventive coverage. A few individual health insurance companies  are providing physical exams before the yearly deductible has been met.

The high deductible health insurance plans that work in conjunction with the Health Savings Accounts most times have much lower premiums than the traditional individual health insurance policies that are providing a co pay for doctor visits, labs and prescription drugs. These policies are slightly more expensive than the catastrophic policies available in Texas. 

We feel the Health Savings Account concept works best for families with the financial resources to fund their Medical IRA accounts.   

The concept of  Health Savings Accounts is still evolving for where it was back in the old MSA days but we are starting to see a product that is not only competitive from a monthly price standpoint, but more first dollar benefits make the product appealing. 

If you are interested in getting health insurance quotes on a federally qualified high deductible health plan please contact our office either by email or phone as our quoting software only provided traditional co pay plans as to eliminate confusion.

                Watch a Short Video to learn more about Health Savings Accounts

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                                      Qualified Medical Expenses