HSA - High Deductible Plan - Health Savings Accounts

High deductible health plans are medical plans that often offer lower premiums in exchange for higher deductibles.  The first dollar costs are borne by the insured(s) so the insurance company is able to offer coverage at lower costs.  There are many different types of high deductible plans, some with 100% coverage after the deductible is met, and some with additional costs in the form of co-insurance after the deductible is met.


Some high deductible health plans (HDHP) are HSA qualified, which is an acronym for Health Savings Account, an IRS approved medical savings account that works much like a retirement IRA, except that the money is saved for the purpose of medical expenses.


The IRS requirements for HSA qualified plans for the years 2010, 2011 and 2012 are listed below.


Year Minimum deductible (single) Minimum deductible (family) Maximum out-of-pocket (single) Maximum out-of-pocket (family)
2010 $1,200 $2,400 $5,950 $11,900
2011 $1,200 $2,400 $5,950 $11,900
2012 $1,200 $2,400 $6,050 $12,100

Golden Rule HSA Calculator

Is an HSA plan right for you and your family?  It depends.  In most cases, the use of an HSA plan allows you to increase your medical deductible safely, thereby lowering your monthly premiums (in many cases by as much as 50%!).   The safety feature is the HSA (Health Savings Account).


The money you invest in your HSA is yours forever.  It is designed to help you cover the individual or family medical deductible, and uncovered medical expenses should it ever become necessary.  However, if you never use it, it will continue to grow at a set interest rate and will be available to you when you need it.   All the while, you will be paying much lower insurance premiums than you would otherwise and instead of the insurance company absorbing the profit from your good health, you will be pocketing the savings instead!


A Health Savings Account is an IRS approved tax free savings account that allows you to contribute specific amounts of money (for either an individual or family) per year to use towards approved medical expenses (including medical plan deductibles). 


Contributions are tax deductible, interest accrues tax deferred, and withdrawals for approved medical expenses are tax free.  After age 65 any money accumulated in the HSA account can be withdrawn for any use whatsoever, and if for approved medical expenses is still tax free.


When used in conjuction with a high-deductible health insurance plan, it often allows higher overall coverage levels at significantly reduced premiums.  Additional benefits include lower overall out of pocket expenses compared to many traditional plans.


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