HSA Insurance: What Makes an Insurance Plan HSA Compatible?
I currently have an high deductible health insurance plan for my family.
It’s great because it’s fairly inexpensive and it will cover us if anything major happens (except a baby, that is).
Plus, it’s HSA compatible, so I get to start stashing cash into my health savings account (HSA).
HSA insurance is the way to go for a lot of people, especially the self-employed individual to manage health care expenses.
The HSA itself is a simple savings account created by the government where you can store tax-sheltered cash to spend on health-related expenses. It’s great in that it’s not like a flexible spending account, which is “use it or lose it”.
With an HSA, you can stash the cash away and then use it only when you need it. Think of the HSA as a type of insurance that allows you to self-insure the everyday costs associated with your health.
If you want individual health insurance that includes a health savings account (HSA), you need to make sure that your health insurance plan meets the federal requirements. Since the HSA is governed by the federal government, they get to decide which plans meet the mark.
Here are the two major requirements to qualify as HSA insurance:
- The sum of the annual out-of-pocket expenses required and the annual deductible should not exceed a certain threshold: $6,050 for individuals and $12,100 for the families.
- The health insurance plan that you purchase needs to have an annual deductible of at least $2,400 for families and at least $1,200 for an individual.
*These numbers are for tax year 2012, but they change for inflation every year. See the IRS HSA Publication 969 for more information.
To make it easy for you, most insurance providers in your State will designate which of their individual plans are HSA eligible. When I signed up through ehealthinsurance.com they had a little symbol by each of the HSA insurance eligible plans.
Unfortunately, healtsharing plans are not HSA-eligible.
Once you have the plan, you can go to a bank, credit union, or insurance company to open your actual HSA.
photo by clevercupcakes
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My company is going to start offering an HSA option next open enrollment so I’ll finally have an option to use one. Thanks for the mention!
@Tom – what do you suggest as an alternative for a self-employed person?
I agree that HSA’s are great plans. I’ve written quite a bit about them. However, I do disagree with the statement concerning great for the self-employed. The self employed cannot always write off the premium and certainly can’t write off the expense unless a spouse is active in the business.
I have an HSA plan, but I’m not using the benefits like I should be. Thanks for the reminder! 🙂
An HSA seems like an interesting option for many! It’s a good thing it isn’t structured like a FSA. always didn’t like that I had to use an FSA by a certain time.