What is an HSA?

The rising costs associated with health care seem to be on everyone’s minds lately. If you’ve been finding it increasingly difficult to meet the expenses associated with your health insurance plan, you may benefit from learning more about HSAs. An HSA may be able to help you afford many of the out-of-pocket expenses associated with your qualified health insurance plan.

An HSA is a health savings account that allows you to save money throughout the year to pay for certain medical expenses. Your employer may also contribute to the funds in an HSA associated to your employee health insurance plan. You will be able to deposit pre-tax dollars into your HSA all year long and withdraw funds as needed to pay for your qualified health care expenses. Money in the account can be invested in mutual funds, stocks, and bonds to earn interest.

Unlike some other types of health care reimbursement accounts, the money can remain in the account from year to year and continue to earn interest as long as it’s in the account. If funds are removed for non-qualified expenses, they will be subject to taxes and a 10 percent early withdrawal penalty.

HSAs are available to be used with any qualified high deductible personal health insurance plan with an annual deductible over $1,200.The out-of-pocket limit for the insurance plan must not be more than $5,950. Higher limits apply for those with family health insurance plans: The deductible must be at least $2,400, and the out-of-pocket maximum must be no more than $11,900. Other limits may also apply.

The IRS places limits on how much you and your employer can contribute to your HSA every year. This amount may be adjusted annually for inflation.

An HSA may not be an appropriate accompaniment to all health insurance plans. It’s important to discuss your needs and preferences with our insurance agent to ensure your individual or self-employed health insurance plan is a qualified HSA plan.

Source: Los Angeles Health Insurance