Let’s face it. With so many options out there, choosing a health insurance plan on your own is confusing enough. And, that’s not even considering supplemental coverage. Do you need it? How does it work?
Using a health savings account to supplement your current health insurance coverage is an excellent way to save money on your healthcare costs. In addition to saving you money on your health care costs, your Health Savings Account (HSA) can get your money working for you by earning interest. And, you can save your HSA money tax-free. If you have a high-deductible health insurance plan, an HAS may be something worth considering to help curb your healthcare costs.
Here are the Top HSA Frequently Asked Questions to get a jump-start on understanding how your HAS works:
Q: How do I start a HSA?
A: First, you have to have a qualifying health insurance plan. A qualifying health insurance plan is one that carries a high deductible. Each year what is considered a high-deductible health insurance plan changes, but generally it would be a deductible that is not considered in the normal range for a health insurance plan. If you think you have a high-deductible health insurance plan then you can contact your employer, health insurance company, or a number of private insured banks and credit unions locally or online to find out about setting up a HSA.
Q: How much can I contribute to my HSA account and are there limits?
A: Every year the amount you can contribute to the HSA is revised, for 2019 these are the limits: a single person can contribute up to $3,500 per year and a family can contribute up to $7,000 per year. The number changes. For example, in 2018 the number was $3,450 for a single plan and $5,900 for a family plan.
Q: Do I pay taxes on the money before it is put into my health savings account?
A: If your employer sets up paycheck deductions for you then, no. If you are not having your employer doing payroll deductions for your contribution, then when you prepare your federal income taxes you will be able to take a deduction for the money you contributed to your HSA that year. When you withdraw your health savings account money to pay for any qualifying expenses, it is withdrawn tax-free.
Q: What are a few examples of HSA qualifying expenses?
A: Some examples of HSA qualifying expenses include: prescription medicines and eyeglasses, office visit co-pays, chiropractors, dentists, orthodontists, over-the-counter medicines such as aspirin and antacids, birth-control (over-the-counter or prescription), and even laser eye surgery to name a few. These are just a few examples. There are many more things that you can use your money for so when you get a HSA plan, be sure to ask for a list of covered expenses.
For a complete list of IRS publication 502 qualifying expenses, click here.
Q: What happens if I lose my health insurance?
A: Once you have money in your HSA, you can continue to use it even if you do not have a high-deductible health insurance plan anymore, however, you won’ be able to keep contributing money to your health savings account.
Q: Can I use my HSA money to pay for my health insurance premiums?
A: You can use your HSA money to pay for your health insurance premiums while you are collecting federal or state unemployment benefits. You can also use your HSA money to pay for COBRA premiums.
Q: What if I need medical care while I am traveling out of the country? Can I use my HSA money there?
A: Yes, your HSA money can be used for the same medical expenses anywhere and in another country.
Q: What if I switch jobs, do I lose my money?
A: No. The health savings account is yours. Whatever money you contribute to your HSA you keep, just as you would in a savings account. Even if you don’t use all your HSA money in one given year, the money will just roll-over to the next year for use.
Q: Can my HSA money be invested?
A: Yes. Your health savings account money can be invested similar to a 401K.
Q: When I die, do I lose my HSA money?
A: No. You can name a beneficiary to receive your health savings account money.
UPDATE: Did you know that online retailer Amazon recently announced that you can now use your
flexible spending account (FSA) or health savings account (HSA) to purchase eligible medical products on its site? That’s right! Amazon’s FSA and HSA stores enable you to add your respective health payment card to the site and shop for your eligible products as you would shop for any other item. What is an eligible expense? You can use your health FSA or HSA to pay for or reimburse yourself for your own eligible medical expenses, as well as your spouse’s and dependent’s eligible medical expenses. Some examples of eligible medical expenses include bandages, eyeglasses and blood glucose monitors.
Have more questions? Let us serve as your guide. Give Roper Insurance a call today at 303.721.1145