What is an HSA Health Plan anyway and why should I care?

HSA Health Insurance Plans offer an inexpensive way to do the following:
1. Provide reasonably priced Health Insurance
2. Put dollars aside for health expenses
3. Save those health expense dollars on a pre-tax basis

There are two parts to an HSA Insurance Plan:
Part 1 Health Insurance:
High Deductible Health Insurance Plans (HDHP’s) offer far lower monthly premiums than traditional plans while still providing good protection. We can help you choose from plans offered by Premera, Regence, Group Health, etc.
Part 2 Bank Account: Your own HSA bank account allows you to save money pre-tax to pay for medical expenses. The money you save is yours forever, goes in tax free, grows tax free, and can be taken out tax free for any qualifying medical expenses. Most all banks offer these accounts.

What’s the catch? The major difference between an HSA vs. traditional health insurance is that you pay for most of your medical care out of your own pocket with the HSA until you reach your deductible. Annual exams and physicals are usually included however. You get the money to pay for this out of pocket medical care from your HSA account which you have been putting money into from your premium savings!

Here is an example:
By switching to an HSA Insurance Plan Jane saves $2,000/year on her premiums.
Jane puts those savings into her HSA account. (up to a max of $3,000 per person or $6,000 per family in 2009)
If she spends $1,000 of her deductible for medical care that year using funds from her HSA she is left with $1,000 in her account! As approximately no more than 10% of the population reach their deductible each year, there is a very good chance Jane will be saving substantial money.

If Jane incurs expenses greater than her deductible, the HDHP kicks in and she can be just as protected as she would be with a traditional lower deductible health insurance plan which costs far more per month.

Is it for everyone? No. If you expect substantial medical expenses in your future such as surgery, becoming pregnant, or you have chronic health conditions etc., you would want to stay with a more comprehensive health insurance.

Who benefits from HSA’s? Those who are healthy, and reasonably expect to stay that way are good candidates for HSA’s. In addition, if you are self employed looking for more ways to sock away pre tax dollars, this is a great option as there is no income limit for contributions to your HSA account.

One more caveat, you must be disciplined enough to actually contribute your premium savings into your HSA so that when you do incur a medical expense, you have the funds put away to pay for it.

Thus, if you are relatively healthy and are disciplined enough to bank your premium savings, then an HSA Health Plan may provide the Health Insurance option you are looking for.