With health insurance premiums increasing every year, many people ask how HSA plans work and how it can benefit them. Health Savings Accounts, also known as HSAs, allow consumers to contribute pretax dollars into a savings account. The pre-tax dollars you put into the account are not taxed when you spend them on approved expenses. Approved medical expenses are basically anything that is approved by the health insurance plan you are enrolled in. There are also other approved expenses like dental insurance premiums, Part B premiums, and vision insurance premiums. Standard medical insurance premiums cannot be paid for with pretax dollars from an HSA. For a full listing of the approved expenses and how HSA plans work, you can read more on the IRS’s website.
How HSA Plans Work with Pretax Dollars
To add money into the account, you must be enrolled in an HSA-compatible health plan. HSA-compatible health plans have three main rules. The first rule is that your plan is required to have a high deductible between $1350 – $6750 per person in 2019. The second rule is that this high deductible must be imposed before you receive any copay or coinsurance benefits. This means you will not have first dollar coverage on the plan. Therefore HSA plans are not a great idea for people who plan to use the policy frequently. The third rule is that the individual maximum out of pocket on your plan cannot exceed $6,750 in 2019.
Your Health Savings Account it is your account regardless if you switch plans or insurance companies. If you have money saved in your HSA, you can always spend it on approved expenses even if you are not enrolled in an HSA-compatible health insurance Nevada plan. The only time you can add pretax dollars to the savings account is when you are enrolled in an HSA-compatible health plan.
How HSA Plans Work with Future Expenses
HSA plans are traditionally some of the lowest costing Reno health insurance plans available in the market. As stated before, if you are going to use the plan frequently, you will incur high out of pocket expenses due to the deductible requirement. The best time to enroll in an HSA-compatible health plan is when you are healthy so you can save money for a future year when you need to use the plan frequently.
There are no HSA-compatible health plans for people enrolled in Medicare. If you want to pay for Medicare costs with pretax dollars, it will be a good idea to enroll in an HSA-compatible plan before you turn 65.
2019 Contribution Thresholds
Each year, the IRS establishes the new guidelines for HSA’s. Here are the approved 2019 contributions for HSA-compatible health plans.
HSA Catch-up Contribution (age 55 or older): $1,000
Maximum HSA Contribution: $3,500 per individual, $7,000 per family