Statistics show that, in 2016, deductibles through the different plans of the Obamacare Act (Gold, Silver, and Bronze) increased 8.4% or $265 on average. Also, in some states, the average increase skyrocketed to $1,395.
Besides the fact that this is hardly an affordable health insurance, these high deductibles have increased what the average family should pay out of its pocket to receive health coverage. So, instead of lowering the costs, the Obamacare Act has driven the insurance costs up and has restricted access to lower-income families.
With Affordable Care Act deductibles and premiums skyrocketing, Health Savings Accounts are becoming increasingly valuable. In fact, HSAs are one of the fastest-growing medical care plans because you are actually managing a savings account for your health. Also, HSAs serve as a reimbursement program and most employers agree on contributing to these tax-advantaged medical plans as an additional employee benefit.
So, if you face financial hardships or are simply looking for an affordable health insurance plan and you don’t know how much money you should save and how much money you can spend on the plan, this HSA for beginners guide will, hopefully, answer all your questions.
What is an HSA?
A Health Savings Account (HSA) is a tax-exempt savings account that allows you to contribute and withdraw funds for your medical expenses. By setting aside a specific amount per year on your HSA, you have instant access to the amount of money you need to cover for qualified medical expenses. The money that you contribute is tax-exempt because the IRS considers HSAs as health insurance plans for tax purposes, and therefore, any income received from a health insurance plan is tax-free.
Which expenses are covered by an HSA?
The HSA is designed to cover your own medical expenses as well as the expenses of your spouse and children, provided that these expenses qualify for the HSA account. Such qualified expenses include doctor visits, dentist payments, MRIs or scan CTs, home care, over-the-counter drugs, weight-loss supplements, nutritional supplements, and vitamins prescribed by a medical practitioner, drug prescriptions, emergency treatment, mobility aid, medical trips and medical equipment. Also, psychological treatment, eyeglasses, chiropractic and physical therapy services, hearing aid, and quit-smoking programs are covered.
Who can contribute to my HSA?
Normally, you are the main contributor to your HSA account. However, one of the main reasons that HSAs are attractive is the employer contributions as an additional benefit. Your employer can match your HSA contributions up to a certain amount, let’s say the first $500 you put into the account. In that way, you get $1,000 matched annually. In case you have more than one HSAs, or your employer contributes to your HSA, make sure not to exceed the maximum allowed contribution for the year. [click to continue…]