What to Know About High Deductible Health Plans and HSAs

Kristina Kraus
Greater Nevada Credit Union
There are a variety of health insurance options to help cover ever increasing medical care costs. One type of insurance that is growing in popularity is the High Deductible Health Plan (HDHP), which offers both a lower premium and the ability to contribute to a tax-exempt Health Savings Account (HSA).

Following are some frequently asked questions and answers about HDHPs and HSAs.

How do I sign up for a HDHP?

Starting November 1, 2015, you can sign up for 2016 coverage through HealthCare.gov. You can sign up online or if your employer offers health insurance, be sure to ask if one of the plans they offer is a High Deductible Health Plan.

What out-of-pocket expenses will I pay?

Under a HDHP, you’re responsible for out-of-pocket healthcare costs until the deductible is met, so it’s important to know in advance the cost of a service, procedure, or prescription to better plan your expenses. It’s also important to know if out-of-network costs go towards meeting your deductible.

According to the IRS, for 2015 the annual deductible must be no less than $1,300 for self-coverage and $2,600 for family coverage. The total annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) cannot exceed $6,450 for self-coverage and $12,900 for family.

What is an HSA?

An HSA, or Health Savings Account, is a tax-exempt account that can be set up with a qualified HSA Trustee. Being tax-exempt, an HSA enables a person to save pre-tax dollars for future healthcare expenses, plus withdrawals are tax-free as long as the funds are used to pay for qualified medical expenses.

Several banks, credit unions, insurance companies and other financial institutions offer HSAs, and each will have its own policies and fees. Greater Nevada is considered a HSA trustee and offers accounts for a low annual fee*.  It’s also important to note that to be eligible for an HSA, you must have a HDHP, among a couple of other requirements.

Do I lose my HSA contributions at the end of the year?

If you contribute money to an HSA, that money is yours until you use it and will simply continue to accrue year over year. If your employer contributes to an HSA for you, that money is still yours to keep, even if you change employers or leave the workforce.

Can I have an HSA and an FSA at the same time?

Similar to an HSA, a Flexible Savings Account (FSA) is an account that you can contribute to, through your earnings, for health care related costs, and that money is not subject to payroll taxes.  You can have both an HSA and an FSA at the same time if you choose but because both are tax advantaged plans, your FSA must be set up as a Limited Use FSA.  Meaning that the monies you set aside in your FSA can only be used to pay for non-medical qualified expenses, i.e., dental and vision expenses.  Unlike your HSA, the IRS states that any money you put in the account must be used for eligible expenses that you incur during the plan year or you lose it. In 2014, the IRS changed the FSA rules and now allows a participant to carry over a maximum of $500 to the next plan year. Anything over that $500 amount is forfeited at the end of the year. 

The main benefit of having both an HSA and FSA is the tax savings you’ll receive by setting aside monies in these accounts.  Especially if you foresee needing extra money toward health care expenses.

Please remember there are limits toward what you can contribute to each account per year.

If you choose a HDHP or already have one, an HSA is a natural addition with many benefits. To learn more about HSAs, contact a Greater Nevada Member Service Representative.