Dublin Health & Benefit Group, LLc
You’ve all heard about HSA’s by now and may have wondered, “What’s all the hype about Health Savings Accounts? How can choosing an HSA eligible health plan provide any sort of tax savings, and why isn’t everybody doing it?
Those are great questions, and not uncommon for us to hear as we enroll groups and individuals in their selected health plans for the year. The HSA discussion is one we have almost daily.
Let’s decide if an HSA health plan is right for you.
First let’s begin with an explanation of what is a Health Savings Account plan, in simplified terms. Remember this is only the tip of the iceberg and each of the items below should be thoroughly researched/discussed with your accountant/insurance broker to gather the additional details. (www.IRS.com Form 8889 and IRS Form 8889 instructions is a credible source of up-to-date information).
HSA eligible health plan requirements:
1. The health plan must be a High Deductible Health Plan (HDHP) with a deductible of no less than $1,350 (for an individual) and no less than $2,700 (for family coverage).
2. The health plan’s maximum out of pocket expenses must have a limit no greater than $6,650 (for an individual) and $13,300 (for family).
3. Tax-deductible contributions to a Health Savings Account are made by the individual, their employer, or by another on the behalf of the individual, to the individual’s HSA account. Tax-deductible amounts have an annual contribution limit which adjusts annually and is based on the individual’s age.
4. Qualified medical expenses are paid by the individual throughout the year using the HSA account. Non-qualified expenses paid using the HSA account will be taxed.
5. The individual completes Form 8889 to deduct the annual maximum allowable contribution they made to their HSA account when filing their annual taxes.
*The rules above change completely… once the individual reaches age 65!
Pros and Cons of HSA plans
Now if you’re confused, you may be wondering if it’s worth all the trouble and rules affixed to having and using one of these HSA plans. Here at Dublin Health & Benefit Group, LLC we’ve found these types of plans are just right for some of our clients, both individuals, and groups.
Pros
• Lower premium, lower maximum out of pocket expense limits, and an annual tax deduction for contributions made to your HSA account. If you have additional funds available to you on a monthly basis, investing in your Health Savings Account (paired with a HSA eligible health plan) would provide some tax savings. And if you’re not using those funds to pay any medical expenses, over several years the contributions could amount to quite a nice sum. After age 65, you may make non-medical withdrawals from this account without a tax penalty.
• Broader provider networks
Cons
• Out of pocket expenses are incurred quicker than with a traditional plan, and you’ll meet your deductible (pay out of pocket up to the amount of your deductible) before the plan begins to pay anything. If you need surgery, expect to pay at least up through your deductible amount.
• Managing chronic illness is more expensive.
• You will be taxed for using the funds in your Health Savings Account for non-qualified expenses if you are under age 65.
• High out of pocket costs may cause some not to seek medical treatment because they fear the expense, causing more expensive issues in the future.
Here at Dublin Health & Benefit Group, LLC, we support you, as our client, by helping you choose a health plan that’s right for you or your team of employees.
Please schedule to discuss your circumstances with one of our team members today!
603-563-8820
Individuals * Medicare * Groups