Health Savings Account Blog

To fully understand how Health Savings Accounts work, many individuals will want to speak with qualified health insurance agents to find out specifically how Health Savings Account plans can help them save money and get the best health insurance possible for their specific health situations.

Here’s what you need to know before enrolling in an HSA plan:

* A Health Savings Account is a savings account that is similar to an IRA in that participants can deposit money into the Health Savings Account that they can then invest into high interest-yielding vehicles, such as stocks and bonds.

* Some employers who offer Health Savings Accounts match the contributions that employees make, or add their own money to the employee’s Health Savings Account.

* Contributions made to a Health Savings Account are tax-free and can sometimes come pre-tax, depending upon how an employer sets up a Health Savings Account.

* There are maximum contribution limits each year. In 2010, the limit is $3,050 for an individual and $6,150 for a family. These amounts include an employer’s contribution, if applicable. Also, account-holders age 55 and older also may make annual catch-up contributions of $1,000.

* Savings from the Health Savings Account grows tax-deferred. As long as withdrawals are used to pay for qualifying medical expenses, the withdrawal is tax-free. However, if the withdrawal is used to pay for a non-qualifying medical expense, then the withdrawal is taxed only upon the withdrawal.

* The Aetna HSA program comes with a Visa Debit Card that you can use to pay for qualifying health care expenses after your Health Savings Account is established. This account also lets you track your activity online anytime.

* Many people choose to pay for their medical expenses out of pocket to avoid withdrawing money from their Health Savings Accounts.

Many employees who have the option of enrolling in a Health Savings Account through their employer can not only build their savings and grow their wealth, but they can also get more control over their health care expenses and health care coverage.

The High Deductible Part of the Plan

Along with the Health Savings Account, participants need to have a high deductible health insurance plan that meets the Health Savings Account qualifications. There are IRS requirements for the type of Health Savings Account health insurance accounts that qualify for coverage:

* In 2010, for each individual, the deductible for the Aetna Health Savings Account is $1,200 for in-network or $2,400 for out-of-network health care coverage.

* In 2010, for family coverage, the deductible is $2,400 in-network or $4,800 out-of-network coverage.

With the Aetna HSA plan, the deductible may be waived for some healthcare expenses that the IRS considers to be preventive or wellness visits, as well as for a short list of prescription drugs. Also, some preventative care treatments are covered without the deductible requirement.

Once the deductible is met for a Health Savings Account health insurance plan, the health insurance provider will cover all remaining healthcare expenses for that year with a cost-sharing arrangement.

Prescription Drug Coverage and the Health Savings Account Plan

Medco, Aetna’s pharmacy benefit management company, has developed a list of prescription drugs that the IRS considers to be preventative. These medications are not subject to the deductible before they are covered. For drugs on the preventive list, Aetna Health Savings Account plan members will only need to pay the applicable copay for the medications.

If the IRS determines that a healthcare service or product does not meet their definition of preventative care, they may be subject to the deductible requirement.

An HSA plan may be right for you if you:

* Are able to afford the maximum annual health insurance deductible limit.

* Can set aside funds to use to cover future healthcare expenses.

Contact a qualified Health Savings Account advisor to learn more about Health Savings Accounts and to find the right Health Savings Account option for you and your family.