The HSA, Health Savings Account changes for 2012 have just been released by the IRS. The IRS increased the amounts HSA account holders can deposit in their accounts for 2012. Individuals who are participating in a High Deductible Health Insurance Plan may now deposit $6,250 yearly. The family can deposit up to $11,900. These plans can be individual High Deductible Health Plans or a group High Deductible Health Plan. (HDHP)
The Maximum deposits are no longer limited by the deductible of the HDHP (High Deductible Health Insurance Plan). This improvement removes limitations on dollars deposited to the deductible. The Maximum deductible for the family plan is $5,950 for 2012. This HDHP deductible is limited two times per family. Simply put $5,950 x 2 is the maximum out of pocket per year per family. The health plan pays 100% of the health costs after the deductible is met. The limitation removal allows the family deductible to approach close to 100% funding. Statistically speaking, a family meeting more than one deductible in a calendar year is very slim.
How it works: All expenses (which are less than the deductible) are paid from the Health Savings Account. This means that there are no copayments for physician visits or drug purchases. You pay 100% from your account. This is a plus for everyone. You, the consumer, are paying cash and paying the cost at the time of service. You present your HDHP card to the physician and receive the PPO discount. This gives you credit to your deductible. You may also ask the physician for a cash discount since you are paying the full price at the time of service. The physicians like this because they do not have to wait 30 to 90 days for payment and are more inclined to give you a cash discount. Ask your physician which is greater, the PPO discount or their cash discount if they will not allow both. Thus, making you prudent about the amount you spend because it is coming out of your pocket. We do advise that all members keep their receipts for any visits and/or prescription purchases to confirm these expenses were credited to your deductible. A cash discount may not be reported to the HDHP so you will be responsible for submitting your receipt.
You should consider an HSA for the tax exempt advantage (no FICA or Income Tax) is paid on deposits. This is a very attractive option. The tax advantage can be as much as 40% but seldom less than 15%. Simply put, you are getting between $40 to $15 dollars in tax credits for every $100.00 you deposit in the HSA account. Best case scenario; when you spend $100.00 from your account, your real cost is $60.
The growth has no limit to the HSA account, if you do not use it, it continues to grow. If you fully funded a family plan for 10 years and did not need to access your account it would grow to over $120,000.00. This does not allow for interest paid to your account. $120,000 gives you many options.
Please remember you must maintain a HDHP to continue making deposits, however you can continue to use the funds for health costs until the funds are completely depleted if you discontinue the HDHP for any reason.
H.S.A.’s can be used to pay for any medical expenses, including Vision and Dental expenses. HSA funds can be used to pay COBRA premiums and LTC premiums. The account holder can use the funds to pay for other family member’s costs such as copayments, deductibles and any other qualified expense from other plans. The HSA account can actually be an option for funding Dental and Vision benefits for deductibles and after the limited benefits have been met.
It is not difficult to open an HSA account, you can do it on line; but you must have a HDHP to qualify. The fiduciary will ask for verification of your Health Insurance plan to be sure it meets the IRS guidelines.
Keeping your HAS account separate provides you with easy mobility in changing your health carrier as often as you like. Your HSA stays with the same company that specializes in HSA’s and you have the freedom to change health carriers at your discretion.
Think, Should I have an HSA? A good start is to ask your-self, Would I rather pay premium to an Insurance company for a doctor co-pay and drug card or place money in a tax favored savings account that I own. Put a pencil to it. Take the Health Insurance premium savings with a HDHP. HDHP’s remove Physician visits and Drug cards reducing the premium. Make your H.S.A. deposit as high as you can stand. The maximum is best. The minimum deposits are around $50.00. Remember the tax credits and step up your deposit.
Important: The physician visits and drugs are paid at 100% from the HSA account and these costs are credited to the deductible.
I have found most people do not understand HSA’s and avoid what they do not understand. I have also seen most become fans after they have worked the figures with a five year plan. The HSA could be described as a consumer driven product, meaning you the consumer are in control of paying the physician and are prudent about the amounts you pay. Physicians will give discounts when paid cash at the time of the appointment or procedure. The HSA account allows you to pay with a debit card at time of services (assuming you have funded the account). Using the HSA, the physician is paid quickly; you are using tax favored money (larger discount for you).
Everyone wins. Yes, this is a good option and should be considered by all.
Servicing groups in Employee Benefits and Individual Health Insurance plans for thirty plus years gives us insight to truths and myths about Health Insurance. We have found that Employees who understand their health insurance plans are better stewards, which keeps premiums manageable. Also, when given the option of a blended plan and a traditional PPO with HSA option, most choose the HSA.
Author: Gary McCarron has been in the health insurance business for over thirty years. Gary has traveled the State of Texas Teaching through seminars business owners, CEO’s, Human Resource persons & Insurance Agents the advantages of using HSA’s, FSA’s, HRA’s and consumer driven health products. Owner of www.TheGroupDivision.com which has served Boerne and San Antonio since 1990. The Group Division is a brokerage agency that specializes in employer and individual family health insurance products. Need to open an account, roll HSA or MSA money, Visit or web, click setup an HSA, it is easy