hsa

What is HSA health insurance?

Health Savings Account aka HSA health insurance works in case you have bought a Silver or gold health insurance plan, the monthly premiums you would be paying against these plans will be really high. An HSA aka Health Savings Account will allow you to save on your taxes for all your medical expenditures. With HSA, you can bring down your out-of-pockets expenditure substantially for all dental, vision, and medical plans. You cannot use HSAs to pay for your health insurance plan’s premiums though. The plan can be used for health plans with high deductibles, which will require minimum coverage basically. Of course, just because a plan comes with high deductibles, it does not necessitate HSA applicability.

HSA 2017 limits (Deductibles, Out-of-pocket costs, contribution threshold, and 55+ Contribution)

To be eligible towards applying HSA medical plan with a high-premium health insurance coverage in 2017, the following limits you must meet. These are:

2017 Min Deductible Max out-of-pocket Contribution mark 55+ contributn
Ind      $1300 $6550 $3400 +$1000
Family $2600 $13,100 $6500 +$1000

What is the need for HSA health insurance?

HSA can significantly help in deducting 100% tax from any gross income. Moreover, all payments out-of-pocket can be tax free, along with tax-free medical expenditure for vision and dental care. You can put only limited amount of money in HSA to get tax-free credits. You are able to roll the funds from one year to the next, even discontinue in between and resume from the next year. You may use your HSA funds for Medicare after you retire. In case you wish to take out money from your HSA funds for non-medical purpose, you will have to pay appropriate income tax plus a penalty of 20%.

 

HSA plan benefits

  • HSA will allow your out-of-pocket payments absolutely tax free. You can often find the deductibles in your health insurance plan is equals the maximum sum you have contributed towards HSA. Hence, your health insurance cost payment will come absolutely tax free.
  • In case you pay higher premiums, you receive cheapest way of paying your health coverage. Here you will not need any type of cost assistance or even reducing your tax payment slabs.
  • You are not in a position to continue HSA for a year. You do not have to discontinue it absolutely. You may resume your HSA health insurance from the next year from where you had left it the year before.
  • Remember that your HSA health plan will cost you 20% penalty in case you are not using the HSA for non-healthcare activities.
  • You do not need to use this amount for health insurance related benefits and leave it for long-term health insurance plans. Moreover, you can use it for Medicare benefits and withdraw the entire sum at 65 without paying any penalty.
  • HSA helps in lowering the tax brackets, where some people are paying even 10% less towards tax payments by investing in HSA every year.

HSA plan eligibility criteria

Under the HSA health plan eligibility criteria, you need to buy a high deductible health plan (HDHP). Your employer can deposit the amount as pre-tax. If you do not deposit through your employer, then the deposit has to be post-tax. Certain limits on the amount that can be deposited, which are set by IRS. The amounts more than set limits is considered excess and cannot be considered as tax-rebate pro.

Once you have made the deposit, the amount will remain in your HSA bank. Even if you drop your HDHP or leave the employment, you can carry your HSA till you you are 65 and can change it to Medicare subsidies.

HSA Vs FSA Vs MSA

Both HSA and FSA are accounts that provide you tax advantage. Here you can save money and pay for your medical expenses just to save tax along the way of your health insurance expenditure.

HSA FSA MSA
Health Savings Account (HSA) can be established by both individuals and employers Flexible Spending Account (FSA) is established by the employers Like HSA bank, MSA is comes with tax exemption, but only for the self-employed or small scales enterprises for different medical expenditures.
HSA contributions are made only when you have HDHP (High Deductible health plan) Pre-tax deductions fund FSA,
Employers may also add on
MSA or Medical Savings Account is covered for high end plans with high deductibles. For businesses having between 2 and 200 employees.
Can be joined with any health plan, but for non-medical plans, 20% penalty will be charged. Can be joined with any kind of health insurance, but not necessary Can be joined with a high deductible health insurance plan. However, when used for non-medical expenditure, penalty of 15% is charged.
The set maximum contributions for 2017 is $1300 for individual and $2600 for family. Earlier, employers set their own limits for FSA contributions of their employees. After Obamacare, the limit has been placed to $2,550. $2,700 for single deductible health insurance plan, $5,450 for a family of 4.
If HSA is introduced by the employer, and you leave the job, the HSA bank allows the employee to take the HSA medical plan with him/her. Every year, from the employee’s paycheck, the contribution gets deducted. Just like HSA health plan, MSA too can be carried forward every year. An employee can take the plan while shifting from one employer to another.
The contribution remains absolutely tax-free in case of medical expenses, but 20% penalty is charged for non-medical expenditure. The entire contribution can be used immediately after the sum has been deposited. The contribution remains tax free as long as used for medical expenses. However, in case of non-medical expenditure, 15% penalty is deducted.

HSA Bank

HSA bank is based out of Milwaukee, Wisconsin, and Shebogyan, where the company will supports the administration, to support the health savings account. It is at the HSA bank you can deposit your HSA account, in case you already have a HDHP from your employer. Just look into the features of each Bank you find, as every bank comes with a different feature.