What is a Health Savings Account (HSA)?
HSA Plans have two parts: a lower cost, high deductible health insurance plan and a tax-favored health savings account. The insurance plan protects you from large medical expenses. The money you save on premiums can be put into your tax-favored health savings account (HSA). You can withdraw the money tax-free to help pay for your qualified healthcare expenses. Once your deductible is met, the insurance plan starts to pay for covered expenses.
Most HSA plans have what is referred to as an aggregate deductible, which means there is one large family deductible that must be met before anyone in the family is covered. (I.E. If a family deductible is $5000, there must be $5000 in claims paid out of the client's pocket before any family member is covered.)
An embedded deductible has a family deductible however, "embedded" within it is an individual deductible. Usually the individual deductible is half or one-third of the family deductible. Embedded deductibles are what people are generally used to when they have a traditional PPO health plan.
An HSA is your account. Your money rolls over every year. There is no "use it or lose it" requirement.
2012 offers individuals and families additional opportunities to save for current and future health care with a health savings account:
- HSA holders can choose to save up to $3,050 for an individual and $6,150 for a family (HSA holders 55 and older get to save an extra $1,000 which means $4,050 for an individual and $7,150 for a family) – and these contributions are 100% tax deductible from gross income.
- Minimum annual deductibles are $1,200 for self-only coverage or $2,400 for family coverage.
- Annual out-of-pocket expenses (deductibles, co-payments and other amounts, but not premiums) cannot exceed $5,950 for self-only coverage and $11,900 for family coverage.
| Minimum Deductible | Max Out-of-Pocket | Contribution Limit | 55+ Contribution | |
| Single | $1,200 | $5,950 | $3,050 | $1,000 |
| Family | $2,400 | $11,900 | $6,150 | $1,000 |
Health Savings Account Plan Comparison
For more detailed information on HSAs, visit the U.S. Department of Treasury website at www.ustreas.gov or talk with your tax advisor.
US Treasury Department on HSA
