Understanding HSA Plans
Friday Health Plans offers HSA (Health Savings Account) plan options in the Bronze tier (all states) and Silver tier (Colorado only). These plans can be an excellent option for many people. Read on to learn about what HSA plans are and why one might be right for you.
What’s an HSA Plan?
HSA plans are available to our small group clients. These plans include a personal savings account which can only be used for qualified healthcare expenses. Often, the company you work for will contribute money to this savings account, and you can also take money out of your paycheck to add to it. The money you contribute to this plan savings account is not taxed if you spend it on qualifying health care costs.
Advantages of HSA Plans
Your HSA account qualifies to pay for many eligible expenses, from most specialist visits to some surgery costs and more. You can contribute money to the account, and so can others, such as your employer or family members —the limit on contributions to this account for 2022 is $3,650 for individuals and $7,300 for families.
You can make pre-tax contributions to your HSA affiliated bank account. This means that money is taken out of your paycheck before taxes are subtracted and added to your account to be used for health expenses. If you contribute to the account after being paid, you can deduct them from your gross income on your tax return and reduce your tax bill. The tax savings continue with tax-free withdrawals, meaning that if you use the money for qualified medical expenses, you won’t have to pay taxes as you pay. Please note that if you use money in your HSA account for costs such as groceries or a non-qualified medical expense such as plastic surgery, it will be taxed and fined. Find a list of acceptable expenses here.
The money you put into your HSA is yours and will roll over year after year. You can spend it on your leisure. If you leave the company you’re at or change health plans, you will retain the bank account and money in it. Most HSAs issue a debit card that makes it convenient to pay for expenses right away.
Overall, HSAs allow you to save tax money, save money for future medical expenses, and pay easier.
Disadvantages of HSA Plans
HSA plans aren’t for everyone.
For one, HSA plans require high deductibles. A deductible is the amount you pay for all your covered health services in a year before your insurance begins to pay for your health care. There may be covered services that don’t take from your deductible, like free primary care visits or telehealth visits. You will pay lower premiums every month, but if you have an emergency, you may find yourself paying the entire deductible, which can be upwards to $8,000 or more.
If you get an HSA plan, you may feel pressure to save money in your account and not seek medical help when you need it. It’s important to remember that your health comes first.
As stated above, if you withdraw money from your HSA for non-qualified expenses, you’ll owe income takes on the money PLUS a 20% penalty. You’ll have to keep receipts of any payments you make using your HSA account to prove the withdrawals were used for qualified medical expenses.
Friday’s HSA Plans
HSA plans help you save for medical and healthcare-related expenses ahead of time. As always, if you have any questions about HSA plans, Friday services, or benefits, please reach out to the Friday Care Crew at our contact page.