Health Savings Accounts

Introduction

A High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) provides traditional medical coverage and a triple-tax advantaged way to help you build savings for future medical expenses while providing you greater flexibility and discretion over how you use your health care benefits.  The tax advantages are that you may contribute funds to your HSA for a tax-deduction, earn interest on the account tax-free, and withdrawals are not taxed for qualified medical expenses.

An HDHP may have higher annual deductibles than a traditional health plan. With the exception of preventive care, you must meet the annual deductible before the plan pays benefits. You pay nothing for preventive care services  received from an in-network provider.

When you enroll in an HDHP, the health plan will ask questions to determine if you are eligible for a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA). If you are eligible for an HSA, the plan credits a portion of the health plan premium into your account each month.  You may also contribute to your HSA up to the IRS maximum amount. You choose whether to use your HSA funds to pay for your qualified medical expenses under your deductible or to leave in the account to continue to draw interest tax-free.  Even if you change plans, the HSA is yours to keep. Withdrawals from an HSA aren’t taxed as long as they are used to pay for qualified medical expenses. 

If you are enrolled in Medicare, you are not eligible for an HSA. The Plan will provide an HRA instead.   If you are provided an HRA, the plan will credit you a set amount at the beginning of the year. You are also protected by out-of-pocket maximums. The maximum out-of- pocket limits for HDHPs are based on IRS rules.

For more information please review our HDHP FastFacts.