Health Savings Accounts
Health Savings Accounts are designed to compliment high deductible group and individual health insurance policies. HSA qualified high deductible health insurance policies are popular as they offer some of the lowest rates available.
Owners of a policy can then setup their savings account at any number of financial institutions. Monies contributed to a HSA are tax deductible (up to yearly limits) and can be withdrawn tax free to pay for qualified medical expenses.
We work with several HSA qualified health insurance providers including Aetna, Anthem Blue Cross and Blue Shield, Coventry, Humana, Golden Rule, United Healthcare and Medical Mutual of Ohio. In fact, there are more than 18 million consumers enrolled in HSA plans as of 2015.
With our agency, you can compare health insurance quotes with the most popular and affordable carriers to obtain a competitive individual or family HSA quote and enroll direct. You can always call us if you would like more information on how HSA plans work.
Please contact us here for group HSA, HRA or FSA quotes.
2015 HSA Contribution Limits And Maximums
There are only a few criteria that must be met to participate in a HSA plan. First, individuals or employees must be enrolled in a qualified high deductible health insurance plan. Such plans will be clearly advertised as HSA compatible.
An annual deductible of at least $1,300 for an individual policy or $2,600 for a family plan must be selected. The insured can choose to establish a health savings account at the financial institution of their choice or through one affiliated with their insurance company.
The maximum out-of-pocket limit is $6,450 and $12,900 for individual and family HSA qualified plans respectively in 2015. The catch-provision for those 55 and older is $1,000 – same as in 2014. Using the catch up provision, both spouses could deposit an additional $1,000 in their HSA each year after age 55.
Not counting the catch-up provision, the maximum HSA contribution amount for 2015 is $3,350 for individual coverage and $6,650 for family plans.
HSA Tax Deductions and Investment Options
Dollars contributed into a HSA are considered pre-tax by the IRS. In this way, a health savings account works much like an Individual Retirement Account. The contributions are tax deductible and grow tax deferred. Unlike an IRA, monies can be withdrawn from your HSA tax-free for qualified medical expenses.
Savings and money market accounts are most commonly used for HSA contributions. Some plans offer mutual funds as an investment option. Of course, market related instruments will add risk and can deplete health savings accounts due to market fluctuations. Investment losses are not tax deductible. It is best to shop around for a HSA provider offering the best terms. Your HSA and health insurance policy do not need to be with the same company.
You are not taxed on any interest or fund appreciation in your HSA account as long as funds are withdrawn for qualified medical expenses. The IRS has a long list of what is considered a qualified medical expense, but it can be something as simple as paying for a doctor’s office visit, meeting the deductible and coinsurance amounts or dental work.
Unused dollars in a HSA plan roll-over year to year and always belong to the insured. The plans are portable, meaning the contributions are not lost should the underlying health insurance coverage later be discontinued. The insured owns all deposits and can name a beneficiary for the accumulated value.
Closing Or Terminating A Health Savings Account
Should you later cancel your health insurance or no longer need a HSA plan, the accumulated funds can be withdrawn. All funds that have not been spent on qualified medical expenses would then be taxed as ordinary income when withdrawn.
Funds do not need to be withdrawn immediately upon cancellation of the underlying insurance plan. Some consumers use their accumulated HSA funds to purchase long term care insurance as LTC plans are deemed a qualified medical expense. This can be a very wise way to use unneeded HSA funds.
Once age 65 is reached, most consumers discontinue their individual and/or family health insurance plans, opt into Medicare and purchase Medicare supplement insurance. Funds remaining in a HSA would not need to be withdrawn lump sum; rather they could used for other qualifying medical expenses not covered by Medicare.
Yearly HSA Contribution Methods And Maintenance
Recently passed legislation allows for lump sum contributions by account holders up to the listed yearly maximums. Policy owners may transfer tax-deferred dollars from a qualified plan like an IRA (Individual Retirement Account) in order to immediately fund an HSA. Employer plans will allow account owners a one time transfer from a FSA or HRA plan.
Health Savings Accounts are designed to be easily maintained and operated. HSA specific websites are setup by the insurance providers so that account holders can manage their deposits and expenditures online. In addition, many insurance companies issue checkbooks and/or credit cards to the insured that draw directly from the account.