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Thursday, February 02, 2012

Learn More about HSA plans from AMS

What is a Health Savings Account (“HSA”)?
A Health Savings Account is a special type of savings account like an Individual Retirement Account (IRA) that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and/or save for future qualified medical and retiree health expenses on a tax-free basis.You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account.

You own and you control the money in your HSA. Decisions on how to spend the money are made by you without interference from a third party or a health insurer. You also decide what types of investments to make with the money in the account in order to make it grow.

What Is a “High Deductible Health Plan” (HDHP)?
You must be covered by an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses (i.e., your “deductible”) but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your plan does not cover.

For 2012, an HDHP must have a deductible no lower than $1,200 for individuals with self-only coverage or $2,400 for family coverage. In addition, the HDHP must limit your out-of-pocket expenses to no more than $6,050 (self) or $12,100 (family). HDHPs can have first dollar coverage (no deductible) for preventive care and higher out-of-pocket (copays & coinsurance) for services received outside the plan’s provider network.

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