Make Your High Deductible More Manageable

Donna Crownover,

May 01, 2014

Managing Your Money

Articles

Enrolled in a High Deducible Health Plan?  A Health Savings Account could really work for you.

Are you one of the millions of Americans who recently enrolled in a Qualified High Deductible Health Plan through The Exchange (also known as the Affordable Care Act)? Or, do you have a Qualified High Deductible Health Plan through an employer?

You may be saying to yourself, “I don’t know! What is a ‘Qualified High Deductible Health Plan’?” 

A Qualified High Deductible Health Plan meets the following requirements: 

  Minimum Deductible Maximum Out-of-Pocket
Single $1,250 $6,350
Family $2,500 $12,700

If you are enrolled in a Qualified High Deductible Health Plan, a Health Savings Account (HSA) may be beneficial to you.

I am enrolled in a Qualified High Deductible Plan!  Now, what is an HSA?

HSAs are accounts designed to help pay for present or future medical expenses for you and your family.  The account can be funded with pre and post-tax dollars, by your employer, or by friends or family. The IRS has established the following annual contribution limits for 2014:

  • $6,550 for family coverage
  • $3,300 for individual coverage
  • $1,000 “catch up” for individuals age 55 or older
Your High-Deductible Health Insurance pays for: You HSA pays for:
Covered medical expenses after the deductible is met Covered medical expenses until your deductible is met
Preventive  care Qualified expenses, such as vision or dental care
Benefits and coverage based on your policy’s terms Copayments, coinsurance, out-of-pocket costs after your deductible is met

Why would I want to open an HSA?

  • You see the true cost of medical care and have better control over how your dollars are spent.  For example, when you have to make a co-pay at the doctor’s office, you can use your HSA debit card and have the funds directly taken from your account. 
  • Funds roll over from year to year; there is no “use it or lose it.” 
  • Funds belong to you – regardless.  If you move, change employers, or change insurance coverage, the money in the HSA belongs to you.
  • Triple Tax Savings:
    • Tax deductions when you contribute to your account
    • Tax-free earnings through investments/interest
    • Tax-free withdrawals for qualified medical expenses

The money you contribute today can provide you with a tax benefit this tax year, the growth can continue in a tax-advantaged account for years to come, and when you do need the funds for medical expenses, you do not pay taxes on the money withdrawn.

An HSA sounds like a good fit for me!  What do I do now?

First, it is important to take a look at what type of HSA may suit your needs the best.

A Deposit HSA is like a checking account for your medical expenses. The funds are easily accessible. You can use Online Banking and will receive a debit card.

If you want to make an investment for future medical expenses (and possibly future retirement funding), a Mutual Fund HSA may be the account for you. These growth-oriented accounts give you the opportunity to invest in a variety of mutual funds.

Does a combination of both options make sense for you?  No problem!  You can open both.

Whether you are a new enrollee in a Qualified High Deductible Health Plan or have had a plan for years, HSAs offer a variety of advantages today, tomorrow and for years to come. 

 

For more information, please visit our HSA page or contact an HSA specialist from UBT. They are happy to assist you.

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This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.


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