HSA Insurance Plans

The Benefits of HSA Insurance Plans

There are countless benefits of HSA insurance plans. We’re here to shine a light on a few of them:

1. How Does an HSA Account Work?

A Health Savings Account is a tax-favored savings account combined with an insurance or healthshare plan. HSAs allow you to deposit tax-deductible funds into a savings account. This account is designed specifically so you can use it to cover medical costs. Eligible medical expenses could include:

• Preventative care,
• Routine appointments,
• Emergency care,
• And more.

Individual HSA health insurance plans are highly flexible. They can be used for any medical procedure you like, as long as it is a qualified expense.

To qualify you must have a high-deductible health insurance plan that qualifies to be partnered with an HSA. Money in the savings account can help pay the deductible. Once the deductible is met, the insurance starts paying. Money left in the savings account earns interest and is yours to keep.

2. Is an HSA Tax Deductible?

Health savings accounts (HSAs) allow you to legally avoid federal income tax. This is a legal means of lowering your pre-tax basis through eligible savings accounts. They save up to $4,300 for singles or $8,550 for families in your HSA health plans account.*Open an HSA with the bank or HSA Administrator of your choice.

You will receive a federal income tax deduction for money deposited. This deduction stands even if you take the standard deduction and don’t itemize your deductions. This tax deduction is available to everyone with no limitations on the amount.

Most states also allow the same deduction for state income taxes. This can potentially add to your savings.

A one-time roll-over from your IRA (Individual Retirement Account) or FSA (Flexible Spending Account) is even allowed. Simply deposit into your HSA insurance plan’s account and enjoy the savings!

If your employer makes an HSA contribution for you, it is “excluded” from income. Even better, it is not subject to any income tax or FICA. Either way, this will immediately reduce your federal income tax due for the year.

* Individuals age 55 and over may deposit into their account (and take a tax deduction on) an additional catch-up contribution of $1,000.

3. Do HSAs Enable Tax-Subsidized Medical Expenses?

HSAs allow you to spend the money in your account tax-free to pay for qualified medical expenses. The money is available even if you have already received a tax deduction from the amount. It is a means of lowering your out of pocket expenses on medical services.This includes any fees from going to the doctor, purchasing prescription drugs, or paying expenses towards your deductible. Once your deductible is met, the HSA health insurance covers your medical expenses as defined in the policy.

In addition to these benefits, your HSA insurance plan’s funds can go even further. You can use your HSA account to cover other qualified expenses not normally covered by a health insurance policy.

Also, your HSA can be used to pay these health care expenses for any spouse or dependent member of the family. This includes same sex and domestic partners. Even if they are not covered under the insurance policy, they are applicable for your HSA.

4. Do HSAs Offer Insurance Premium and Tax Savings?

Health Savings Accounts can help you save money on both your insurance premiums and your income taxes. And as any savvy saver knows, tax advantages and monthly premiums can’t be overstated.Because HSAs must be paired with a high-deductible health plan (HDHP) and are sometimes paired with health sharing plans, savings abound. Your health care costs are often much lower than a typical plan.

The savings from the lower monthly costs along with the tax-free deductions could be $10,000 or more every year. This is one of the largest and most obvious benefits of pairing HSA insurance plans with high deductible health plans.

Below is an example comparing typical non-HSA plan costs compared to an HSA plan within a health sharing program.

This example is based on the average health insurance premium for a family of four living in a metropolitan area. Covered medical expenses in this example total $2000 and $550 in expenses for dental care, contacts and eyeglasses.

If you still have questions about HSA medical insurance benefits, we invite you to download our helpful guide below:

Let’s see what a family could save with an HSA Plan

The benefits of HSA don’t just stop at individual HSA health insurance plans. In truth, families stand to save enormously when relying on these helpful plan types. Here is an example of one such family:

*A health sharing program is not health insurance, but rather a program that facilitates sharing of medical expenses among members. Go here to learn more about our health sharing program that can be paired with an HSA. If you are a member of a healthshare, learn about an HSA-qualified preventive plan that can be added to healthshare. Plans are available for as low as $85 a month.

More details about how health savings accounts work can be found on our HSA Frequently Asked Questions page.