What is a Health Savings Account?
A Health Savings Account (HSA) is an account used to set aside funds on a pre-tax or tax-deductible basis to pay for routine healthcare – such as office visits, prescription drugs, and glasses or contact lenses. The money put into an HSA will reduce income taxes similar to the money saved in a 401(k) plan. An HSA can be established at a bank, insurance company, or third party administrator. If an HSA is part of an employee benefits program, the employer may also make contributions to the account. There are annual limits on the amount of money which can be contributed to an HSA. The money that is not spent from the HSA rolls over each year for future healthcare needs. Employees own their HSA accounts and keep them upon leaving the company. Funds deposited into the HSA can be conveniently accessed through the use of a debit card or check.
What is a High-Deductible Health Plan?
To qualify for an HSA account you must also be enrolled in a high-deductible health plan. The annual deductibles with these plans are higher than a typical health plan; however, the money from the HSA account is usually used for qualified medical expenses that will be applied towards the health plan deductible. Depending on the balance in your HSA account, the out-of-pocket expenses incurred, before the health plan starts paying benefits, may be minimal. If you are not already enrolled in a high-deductible health plan that qualifies for the HSA program, Metro Atlanta Financial Group can provide information about the qualified health plans offered by leading insurance carriers.