Because they offer subscribers:

1. Lower premiums
2. A single Deductible
3. Great TAX benefits

What Is An HSA?

HSA stands for Health Savings Account. It has two components: 1. A qualified high deductible insurance plan (AKA HSA Plan), and 2. a savings account.

HSA Plan

HSAs differ from the traditional PPO plans. With a traditional plan a subscriber usually has a $25 Dr. Copay, a Drug Copay, and a deductible.  These are great plans, but they cost more and the money used for copays doesn’t apply to the deductible.

However, with an HSA plan there are no Copays. Everything is paid out of pocket. This might sound bad, but there are some real perks. First, every dollar you spend at the Dr’s office or on prescriptions goes towards your deductible. This makes it easier for you to reach the deductible. Second, even though you don’t get a copay, you do get the discounted rate that the insurance company has negotiated with the M.D. or hospital. The savings can be up to a 50% discount! This helps the consumer become better shoppers of Health Care. Many times we get tests we don’t need or buy name brand prescription drugs when we could buy the generic ones for around $15. When the consumer pays out of pocket, they learn to become better shoppers of health care.

Savings Account

The savings account is probably the best part of the HSA. The account is separate from the plan and costs about $3 to $5 a month extra. But the benefits are outstanding!

With the savings account, every dollar that is put into the account (up to the annual max) is 100% TAX deductible. This money then grows TAX free in the account! When a deduction is made, it doesn’t matter if it is principle or interest, it is TAX free if it is for a qualified expense. What is even better is that the account balance rolls over every year without taxes or penalties.

The annual contribution limits in 2010 are $3,050 for singles and $6,150 for families. Plus, if you are 55 years or older you can contribute and extra $1,000. If you are a family and you max out your contribution that means that you will have a $6,150 deductions off of your gross income on next year’s taxes. Remember, that money will grow tax free!

What is considered a qualified expense from your savings account? You can use the money in the account for all of the following;

Ambulances

MD Visits

Dental Work

Orthodontics

Birth Control Pills

Braille Books and Magazines

Chiropractor Visits

Acupuncture Visits

Prescriptions

And much more… A whole list can be found in IRS Publication 502.

It is important to note that there are taxes and penalties if the money is taken out for nonqualified expenses. So make sure you only use the account for qualified medical expenses.

If you would like more information on HSAs call me at 361-993-8888. You can also get instant quotes on our website www.seamancompanies.com

More HSA information in my next post.

All information has been taken from The Library of Congress & The DowJones Report (this is a PDF). I have bolded important dates and statements.

• Seeks to provide”Quality Health Insurance Coverage for All Americans” by amending the Public Health Service Act to prohibit preexisting health condition exclusions from insurance coverage.
• Prevents Insures from dropping coverage of an enrollee except on terms of fraud.
• Health insurance exchanges: requires states to establish an American Health Benefit Exchange for purchase of qualified health insurance plans. Creates a related entity to assist with small business health coverage.
• Individual coverage, penalties: requires individuals to maintain minimal health care coverage beginning in 2014. Imposes a penalty for failure to maintain such coverage with exceptions for low-income individuals, members of Indian tribes, people who object on religious grounds.
• Penalties for medium-sized Businesses: requires employers of 50 workers who don’t offer coverage to pay a fee up to $750 per worker.
• Creates a Small Business Tax Credit: beginning in 2010, small employers can elect a tax credit for 50% of their employee health care coverage expenses. Small employers are generally defined as businesses with no more than 25 employees.
• On abortion, permits states to prohibit abortion coverage in qualified health plans offered through an exchange in the state. It prohibits federal funds from being used for abortion services and requires separate accounts for payments for such services.
• On Medicaid, the bill seeks to extend Medicaid coverage, beginning in calendar 2014, to certain low-income individuals under age 65. States can expand Medicaid eligibility to these people as early as April 1, 2010.
• Sets new standards for Medicare payment to hospitals and doctors by linking “payment to quality outcomes under the Medicare Program.”
• Implements the “Biologics Price Competition and Innovation Act of 2009″ that gives drug makers 12 years of protection, or exclusivity, to sell biologic medicines before facing the threat of cheaper, off-brand alternatives.
• New excise tax on high premium insurance plans raises $149. 1 billion over 10 years.This tax would be 40% of premiums paid on plans costing more than $23,000 for family plans and $8,500 for individual plans.
• New Medicare tax on wealthy: increases after December 31, 2012, the Medicare hospital insurance tax rate by 0.9 percentage points for individual taxpayers earning over $200,000, or married joint filers making more than $250,000.
• Raises medical tax deduction threshold from 7.5% to 10% of adjusted gross income beginning after 2012.
• Imposes a 10% excise tax on indoor tanning after July 1,2010.
• Imposes an annual fee on the branded prescription drug sales exceeding $5 million of manufacturers and importers of such drugs beginning in 2010.

There are many new provisions in this bill that will bring a lot of change. But, most of the changes won’t come until 2014.

Come back soon to see the new blog.