Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

09/29/2006
What are high deductible health insurance savings plans?
Could you explain what high deductible health insurance and health savings accounts are and how they work?
Gail V. Marquet:
expert info »
Health savings accounts are usually set up for individuals who have high deductible health insurance. A specific dollar amount is deposited in the HSA each pay period and this amount can be used for any medical expense. Funds in the HSA can be rolled into the following year if they have not been used. This is excellent for a person in good health with minimal medical needs each year.
Claudia James:
expert info »
HSA (health savings accounts) are great for individuals or families with high deductibles ($1,050 per individual and $2,100 per family) and high out-of-pocket ($5250 individual and $10500 family) They can be establishd thru the employer or by the individual. They function as an IRA in that you do not lose the money. Contrary to health reimbursement accounts, the monies accumulate year-after-year and they roll with you. You can invest up to $2,700 per year individual and $5,450 per family. Go to this website for additional info http://www.treas.gov/offices/public-affairs/hsa/faq_contributing.shtml#hsa1.
Anne Delle Donne:
expert info »
A high deductible health insurance plan is a health plan that has a deductible for out of pocket expenses for health care costs- that are at least $1,050 for yourself and $2,100 for yourself and your family. There is a maximum out of pocket expense limit as well and for individuals of $5,250 for individuals and $10,500 for families. This means that if you are an individual with a high deductible health plan you will pay a minimum of $1,050 of your own money before the insurance will cover your medical costs. HSA plans have two components: they must have a qualified high deductible health plan, and they allow for tax-free savings for your medical claims. An example would be an individual who purchased a high deductible plan with a $2000 out of pocket deductible (where 100% is covered after this annual $2,000 deductible is satisfied). The individual would be able to open up a HSA account (typically with a bank or other financial institution) where they can deposit the lesser of their deductible amount ($2,000) or the 2006 limit, which is $2,700. So in our example our individual would deposit $2,000 into her account (monthly or annually as cash flows permit). They can use this money in their HSA account to pay for their medical expenses for the year-this is helpful because in our example the individual pays for the first $2,000 of medical expenses before their health plan kicks in. Please visit the following website for more details as this only scratched the surface: http://www.opm.gov/hsa/hdhppresentation.asp.
 

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