Getting to know your high-deductible health plan
If your company offers you a high-deductible health plan, also known as an HSA-eligible plan, as an option, it's a good idea to become familiar with how it works. The first question people often have is how it differs from a traditional health plan. Here is a quick comparison:
HDHP versus a traditional health plan
Conquer your HDHP concerns
When it comes to HDHPs, knowledge is power. Be aware of the facts so you can make an HDHP work for you. If you're considering an HSA-eligible plan, you may have some concerns:
How an HDHP works with an HSA
An HSA can be paired with a qualified high-deductible health plan and offers the opportunity to save for health care expenses. If you're enrolled in an HSA eligible plan, what you save in premium costs can help offset out-of-pocket expenses not covered by the plan, especially if you put those savings into an HSA.
For example, you might decide to save at least up to the cost of the plan's deductible, in case of any unexpected medical costs.
Many people are discovering the advantages of saving money with a HDHP paired with an HSA, especially for health care expenses now and in the future. Want to learn more? Discover if an HSA is right for you here.
1 Per IRS guidelines in 2017, an HDHP is a health insurance plan with a deductible of at least $1,300 if you have an individual plan – or a deductible of at least $2,600 if you have a family plan. The deductible is the amount you'll pay out of pocket for medical expenses before your insurance pays anything. In addition, the plan's out-of-pocket limit must be no higher than $6,550 for an individual plan or $13,100 for a family plan. The out-of-pocket limit is the most you'll have to pay in a year for medical expenses covered by your insurance plan.
2 About Triple Tax Advantages: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Any interest or earnings on the assets in the account are tax-free. You may be able to claim a tax deduction for contributions you, or someone other than your employer, make to your HSA. We recommend you contact qualified tax or legal counsel before establishing an HSA.
3 Gustke, Constance, "Will a high-deductible health plan save you money?" bankrate.com, January 20, 2011