Insurance

HSA SERIES, PART 1: Frequently Asked Questions About HSAs

By Roy Ramthum, HSA Consulting Services, CMT Contributor, HSAEd.com

JULY 23, 2013 – As consumer driven health plans continue to expand across the country HSA Ed hopes to provide you with the most up to date information on Health Savings Accounts. Implementing a Health Savings Account program helps you control your health costs and puts you in charge of your family’s health care. Over the next few weeks, Concierge Medicine Today and HSAEd.com will focus on topics surrounding HSAs by taking a look at some of the frequently asked questions, hot topics, concerns and more. This week, let’s take a look at some of the most FAQs.

What is a Health Savings Account (“HSA”)?
A Health Savings Account is a special type of savings account like an Individual Retirement Account (IRA) that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and/or save for future qualified medical and retiree health expenses on a tax-free basis. You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account.You own and you control the money in your HSA. Decisions on how to spend the money are made by you without interference from a third party or a health insurer. You also decide what types of investments to make with the money in the account in order to make it grow.
What Is a “High Deductible Health Plan” (HDHP)?
You must be covered by an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses (i.e., your “deductible”) but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your plan does not cover.For 2012, an HDHP must have a deductible no lower than $1,200 for individuals with self-only coverage or $2,400 for family coverage.  In addition, the HDHP must limit your out-of-pocket expenses to no more than $6,050 (self) or $12,000 (family).  HDHPs can have first dollar coverage (no deductible) for preventive care and higher out-of-pocket (copays & coinsurance) for services received outside the plan’s provider network.

Who is eligible for a Health Savings Account?
To be eligible for a Health Savings Account, an individual must be covered by a HSA-qualified High Deductible Health Plan (HDHP) and must not be covered by other health insurance that is not an HDHP. Certain types of insurance are not considered “health insurance” (see below) and will not jeopardize your eligibility for an HSA.

Can I get an HSA even if I have other insurance that pays medical bills?
You are only allowed to have certain types of insurance like auto, dental, vision, disability and long-term care insurance at the same time as an HDHP. You may also have coverage for a specific disease or illness as long as it pays a specific dollar amount when the policy is triggered. Wellness programs offered by your employer are also permitted if they do not pay significant medical benefits.

Does the HDHP policy have to be in my name to open an HSA?
No, the policy does not have to be in your name. You can still be eligible for an HSA even if the policy is in your spouse’s name. As long as you have coverage under the HDHP policy, you can be eligible for an HSA (assuming you meet the other eligibility requirements for contributing to an HSA).

About HSAEd.com and Roy Ramthun

Roy Ramthun, “Mr. HSA”

Roy Ramthun is President of HSA Consulting Services a health care consulting practice specializing in Health Savings Accounts and consumer-driven health care issues. Prior to forming his consulting practice, Mr. Ramthun was the Special Assistant to the President for Economic Policy at the White House. Please visit our website and let us know if you have any questions or if we can help you in any way. Many questions can be answered in our Health Savings Account FAQ or you can always Ask Mr. HSA.

Phone: 262-348-1300
Email: 
askMrHSA@hsaed.com

2 replies »

  1. Thanks for the info on HSA’s. Lots of my patients are getting their open enrollment info now. It seems that Direct Care Practice fees should be able to be paid from an HSA, but I was wondering if this has ever been clarified? (I know there were several bills pending, but not sure if they were passed.)
    Appreciate any clarification.
    Sharon

  2. Hi Dr. George:
    My name is Michael Tetreault, Editor of Concierge Medicine Today (CMT) and The Direct Primary Care Journal. We received your comment/inquiry related to HSAs and wanted to be sure to let you know a quick reply. We contacted our HSA experts, sent them your questions and they replied. Here is their response:

    “No this has never been clarified. Please advise patients they cannot deduct or pay their annual fees with HSA dollars or other similar accounts. They should be able to reimburse fees for individual services if the doctor can produce a few-for-service bill.”

    As always, it’s our pleasure to be of service to you. I’d love to know how your practice is doing and hear about your experience with your model. Please don’t be a stranger and thank you for your continued support and subscribing to CMT.

    Have a wonderful week!

    Sincerely,
    Michael

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