HSA Plans

HSAs were first enacted in 2003 to help reduce overall costs of group health coverage for employers and make affordable health insurance available to more employees.  The theory is that if covered persons need to pay a portion of their medical expenses out of their own HSA, and they retain what is not spent, they will become wiser health care consumers.

HSA funds must be deposited in an authorized account with a bank or other financial institution.  Unused funds build up in the HSA and can earn interest or dividends that accrue tax-free.  Over a number of years a substantial fund balance can accumulate, much like a tax-advantaged IRA.

Here’s How HSAs and High-Deductible Health Plans (HDHPs) Work:

• ASR helps the employer implement a qualified HDHP, usually at a lower self-funded plan cost.
• A qualified HDHP requires a minimum annual deductible and maximum out-of-pocket limits, which are adjusted annually for changes in the cost of living.  Employers can also select higher deductibles.
• HSA-qualified HDHPs do not allow for traditional office visit or prescription co-payments but require that such expenses be applied to the deductible.
• The employee can spend HSA funds at his or her discretion on health care expenses as allowed under the law, or the employee can withdraw funds for any purpose subject to income tax.
• HSA balances are allowed to earn tax-deferred interest, and unused HSA funds may be rolled over each year until Medicare eligibility.
• Should a catastrophic health care condition arise, the HDHP will pay the benefits for expenses in excess of the HDHP’s annual out-of-pocket limit.

For more information on HSAs and a more in-depth comparison of all consumer-directed health plan options, call us or send us an e-mail today.