Can someone explain to me? Health Savings Account (HSA)

DH's company is offering this and I feel clueless. I try to read the information they sent, but it's not sinking inn. Can anyone explain in layman's terms or point me to a easy to understand site?

Re: Can someone explain to me? Health Savings Account (HSA)

Is it an HSA or an FSA? Some people use the term interchangeably.

Either way, typically you take a certain amount out of your paycheck to add up to a certain amount. The caps differ depending on which type of plan it is. The money comes out pre-tax and goes into the account. However, with an FSA, you can use the whole account from day 1. So if you decided you wanted $1200 in the account and you are paying $50 a paycheck into it all year, on Jan 1, you can still use all $1200. With an HSA, you can only use what you've put in so far.

Basically it's a way to set funds aside for medical expenses, particularly if you have a high deductible plan where you'd have to pay a lot of money out of pocket up front

Pros:
1_: You're setting money aside automatically each week, so you know it's there, rather than having to come up with all of the money in the beginning of the year when you're subject to the deductible.

2: It's pre-tax, so you can lower your tax burdern

Cons: Wirh an FSA you "use it or lose it".
With an HSA - you don't have access to the money all at once, but you don't lose it, since it's YOUR accounht


FSA are generally more flexible. They can be used for LASIK, orthodonia, child care, etc, whereas the HSA is more limited.

I beleiev the HSA can also be a investment account, but will carry fees. A FSA doesn't usually have a fee, but you won't get any interest.

Either way, it's a way of setting aside pre-tax dollars to put into an account for your healtcare needs.

ETA: I should be clear. You use this fund to pay bills early in the year which are subject to a deductible, or co pays throughout the year and prescription drugs.

On some plans you get a credit card you can use. Some plans will automatically pay some vendors, like mine will automatically pay CVS for me. Sometimes you'll automatically get a check any time there's something you have to pay, or some plans require you to fill out a claim form. My FSA plan just automatically paid the pharmacy and any time there was a bill I had to pay, I'd just get a check.

Message edited 11/9/2012 7:13:06 PM.

Re: Can someone explain to me? Health Savings Account (HSA)

this is HSA...they have a Visa CC to use.

I was confused with the way the company is wording things with deductibles? etc

Is it possible that they are only offering it i you elect to take the high deductible medical plan?

The company is contributing the first $500 and i hate to pass up on free money? but since we buy up our health plan, it seems we are not eligible? I'm so confused.

I won't be home to watch the webinar.

Can someone explain to me? Health Savings Account (HSA)

NM...read it as HRA, not HSA

Message edited 11/9/2012 7:47:05 PM.

Can someone explain to me? Health Savings Account (HSA)

What is the deductible and Out of Pocket Max on the plan? They may be contributing $500 but whatever the difference is you will be responsible for coming up wth. That $$ would definitely only be for the high deductible plan. If you go with a regular plan you wouldn't be eligible for the HSA. It's hard to explain the pros and cons of that specific plan without seeing the Summary Plan Doc.

Re: Can someone explain to me? Health Savings Account (HSA)

Thank you. I think I understand. HSA is only for high deductible plans. FSA is available for anyone?

Re: Can someone explain to me? Health Savings Account (HSA)

I just wanted to say I think there are new limits on HSA that are lower than they have been in the past.

Re: Can someone explain to me? Health Savings Account (HSA)

First, please read every word of the benefits communications you received from the organization that sponsors your plan. Call or write to them if you have questions.

1. The only way you can contribute to an HSA (or receive employer contributions) is if you are enrolled in a high-deductible medical plan (sometimes called an HDHP) and have no other medical coverage.

2. The HDHP plan works like this. Generally, you pay for 100% of services until you meet your deductible. The deductible is high, sometimes $2,500/family. In most cases, your doctor will process the claim through your insurance, then send you the bill in full. Your insurance company will track the extent to which you meet your deductible. Once you meet your deductible, the plan will start to pay x% of eligible expenses.

In many cases, your prescription drug expenses will count toward your deductible. (You'll have to pay in full for those too.)

You pay a per-pay-period premium for the HDHP coverage.

3. If you choose, you may open an HSA. Generally, you would fund it through payroll contributions so you'd get the money your employer also contributes. So, each pay period, you're making two contributions: one for the HDHP coverage premium and the second for your HSA contribution.

The money you contribute to your HSA goes into your personal HSA account. You own the account. For most HSAs, once you reach a certain balance, then you can choose investment options for the money in your account. You are taking on the investment risk -- you may see gains or losses, like any other investment account.

You can use the money in your HSA toward reimbursing yourself for the money you laid out before you met your deductible. HSAs often have checks and debit cards; read up on how those work.

You must have money in your HSA in order to withdraw from the account. In practice, I find that there's at least a month's lag between when I visit the doctor and when I get the bill (and then a subsequent lag when I pay the bill). Regardless, you may choose to set some money aside to pay medical expenses for that period of time when you haven't saved enough in your HSA and you haven't met your deductible.

Generally, money you contribute to an HSA and use for eligible expenses is not taxed.

Remember that actually opening an HSA is an important step. It's like opening a bank account. In some cases, if you don't open the HSA by the company's deadline, you may miss out on the company's contribution.


4. If you have an HSA, you can't also have an FSA that covers medical expenses. However, if your company offers it, you can have a "limited purpose" FSA that's available for eligible dental and vision expenses only.


HTH

Re: Can someone explain to me? Health Savings Account (HSA)

Re: Can someone explain to me? Health Savings Account (HSA)

Re: Can someone explain to me? Health Savings Account (HSA)

Thanks for clarifying.


The HSA is only available for the high deductible plan, but if you elect another plan, you may be eligible for an FSA instead. I believe you can sometimes do both