HSA Plans and Deductibles
Many people I speak with often focus on the deductible of the health insurance policy they are considering. The deductible can often be used to determine how rich or “good” the plan is. While this can often be the case, many people can be easily confused by HSA plans. These plans often have very low deductibles compared to similar costing plans in the market. If you are picking a plan based on the deductible and think your HSA policy is a diamond in the rough, you might be sorely surprised.
The Common Mistake
If you do not have an HSA account and don’t plan to start one anytime soon, you should avoid HSA eligible plans. On any traditional bronze level health plan, your copays are usually charged prior to you having to meet the deductible. For example, if your deductible is $8,000 and your doctor visit copay is $20 then you do not have to pay $8,000 first. On day one, you will just pay the $20 copay. This is not the case on an HSA plan. If your deductible on the HSA plan is $1,400 and doctor copay is $20, you will need to pay $1,400 first before you can begin paying only the copays. If you would have selected the traditional plan, you might have saved that $1,400 unless something very major happened.
When HSA Plans Work Great
This article should not deter you from starting an HSA. Health savings accounts can be great ways to save up cash for medical services. The best part is you can make contributions pre-tax or you can deduct them from your taxable income. This means when you pay for medical services, you were never taxed on the dollars your using which saves you money. You will also pay less in taxes at the end of the year since your taxable income is lower. Also, when you turn 65 you can now treat your HSA like a retirement account.
You can always call our office if you would like to discuss the best option for you or if you have additional questions on HSA plans. As a health insurance broker, we can go over all these options for no additional charges or fees to you or your plan.