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Health Insurance Basics – All About Health Savings Accounts (HSA)
Posted by | Posted in Health Insurance | Posted on 08-12-2009
A Health Savings Account is an account that is owned by an individual used to pay for current and future medical expenses. These accounts are offered in conjunction with a “High Deductible Health Plan.”
High Deductible Health Plans are health insurance policies that do not cover first dollar medical expenses, other than preventative care. They can also be a:
HMO
PPO
Indemnity plan
Health Savings Accounts were created by the December 8, 2003 Medicare legislation that was signed into law by President Bush. These accounts are modeled after Archer MSAs.
Individuals who are eligible for HSAs include those that are:
Covered by an HDHP
Not covered by health insurance
Not enrolled in Medicare
Can’t be claimed as a dependent on someone else’s tax return
There are no income limits that contribute to HSAs and people are not required to have earned an income to contribute to an HSA.
There are certain types of medical benefits that will make you ineligible for an HAS. These are typically referred to as “1st dollar” medical benefits, such as:
Medicare
Flexible Spending Arrangements
Health Reimbursement Arrangements
Tricare Coverage
A high deductible plan is a health insurance with a minimum deductible that is $1,100 for individual coverage and $2,200 for family coverage. Annual out-of-pocket is limited and includes deductible as well as co-pays and are set at $5,500 for individuals and $11,000 for family coverage. All covered benefits in a plan must apply to the plan deductible and include prescription drugs.
If HDHP provides prescription drug benefits, then the prescription drug expenses must be subject to a deductible or the individual may not contribute to the Health Savings Account.
In a high deductible plan, preventative care does not include any service or benefit that is intended to treat an illness, condition or injury that is already in existence. There are certain drugs and medications that can be considered preventative care. These drugs are drugs such as cholesterol-lowering medication for individuals who are suffering from high-cholesterol.
Contributions to a HAS can be made by either the employer or individual and both. If the contributions are made by the employer, the amount is not taxable. If the contribution is made by an individual, the amount is considered an “above the line” deduction.
If others make contributions on behalf of the individual, these contributions can be deducted by the individual as well. As of 2007, individuals are allowed a one-time transfer from their IRA to an HAS as well. There are maximums that are set at $2,850 for self-only coverage and $5,650 for family coverage. Once an individual is enrolled in any type of Medicare, they cannot receive contributions to their account.
Although there are numerous benefits to Health Savings Accounts, there are also a few drawbacks. The main drawback is that you must have your deductible paid before you can receive benefits from your health insurance policy. Although these accounts pay for your basic preventative care, there are certain areas afterwards that may not be covered.
These plans often tend to benefit only two groups of people, those that are very healthy and those that are very ill. This is because you typically don’t have to pay for many medical expenses. At the same time, those who are very ill and do have large medical expenses on a monthly basis. However, once your deductible is met, the plan will pay for medications with the same co-pay as your other medical expenses.
Watch the video related to health insurance
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Help answer the question about health insurance
What health insurance plans cover the most patients in Indiana?Who are the top 6 health insurance plans in Indiana in terms of number of patients covered? I believe Anthem is number one?
1) Most employer provided health insurance is deducted "pre-tax" so there is no deduction on the tax return.
2) Your parents must be your dependents (or would have been your dependents except for the gross income test) for you to take a deduction anyway. So, unless you are supporting them: No.
If you are self employeed you should take a serious look into Health Savings Accounts, for several reasons, starting with there is a huge savings on your monthly premiums regardless if you are insuring yourself or you and your family. Things that are considered by the insruance companies are the area you live in, the type of work you do and any pre-existing conditions you might have. If you are in the state of California, and you have employees, you need a minimum of two employees and/or 75% of the payroll to participate in the plan (regardless of HSA or regular insurance) to get a guaranteed issuance of the insurance.
If you are not self employeed but do have a job, again the HSA is great way to go, because you can make pretax contirbutions to the plan, take it with you where ever you go, and keep the insurance with you when you retire… which as common sense tells us, you are going to need healthcare much more in your retirement years (ie when you are older) then you will now. Also any qualified medical expenses can be paid tax free from the account, and once you hit your deductable out your account, anything above that is paid for by the backing insurance company.
One note about the non bias oppinon of "brokers," they get paid on a commission as well by the companies they represent, and some companies pay more than others. Just because you are working with an "independant" does not mean you are getting the best price, or service. You want to work with someone who knows the products that they work with inside and out, or have access to the people who do so that all your questions can be answered to your satisfaction. Some times a huge selection does not mean a huge savings in time and money.
The purpose of any type of insurance is to protect against catastrophic loss. Using health insurance as an example, most everyday medical expenses are not very expensive (a physical exam averages $150.00+/-), but if you are admitted to the hospital for an emergency your medical bills would be in the tens of thousands of dollars at a minimum. If you do not have insurance you "self-insure" againts that potential catastrophic loss. Without insurance, the average person would face financial ruin if faced with a major loss.
I don’t know if i can even trust this cause the dam website don’t work at all so why try!
Please check with you State Department of Insurance to validate the company has the authority to sell in your state. Also, check with the State DOI, if there are major complaints against the insurance company selling the plan.
most insurance will cover the costs you mention if the doctor thinks it is medically necessary.
Well, if she's 40 and perfectly healthy, it's going to cost her about $500 a month to have a low/no deductible plan that covers checkups.
You BUY it on a month to month basis. If you want low monthly payments, you have to cut the coverage – like take a $10,000 deductible. Or higher. That would cut payments down to maybe $200 a month or less.
The older she is, the less healthy she is, the more it costs.
Your best bet, is to find a local, independent agent, who can help you balance cost with coverage.
No.
The insurance through your husband's employer does not meet the test of having been established through the S-corp.
i htought the main reason of living in a society was to help each other out, am i wrong?
You've asked a very broad question. There is no simple answer.
In truth, health insurance works a little differently in each state.
To answer your specific questions:
1) No, health insurance is not compulsory for everyone. If you're lucky, you are able to join a group policy at work. (If you're really lucky, it's a good policy and the employer pays at least half of it.) Some states have recently made it compulsory, but that's such a recent change that there's no clear cut answer yet for how that's going to work.
2) What happens if someone can't afford it is… they don't get it, usually. Except if your income puts you below the "poverty level", in which case you qualify for Medicaid. (In some states there are programs that typically provide assistance with insuring children, though they are few and far between for covering adults.)
3) Health insurance rarely covers all the bills when you have a procedure done. Most plans cover 50-80% after you meet your deductible. The deductible amounts vary widely (but the trend is that the deductibles are getting higher and higher to keep the premiums down.) If you're really, REALLY lucky, you don't have a deductible (which is only an option on group plans), and you may only have to pay 10% of covered charges. (These plans are few and far between. As in, you might have them if you're in Congress.)
4) Yes, the patient has some say over procedures. However, if the patient opts for an "experimental" procedure, or one that isn't deemed "medically necessary", then health insurance may refuse to cover any charges at all.
In the end, as with most things, the middle class takes the brunt of these costs. This has become such a problem that more than 50% of all bankruptcies are as a result of medical bills (and of those, more than 75% had health insurance.)
** Edited to add:
It's not ALL about the money when a procedure is involved. If it is, the state keeps track of complaints filed on behalf of consumers with "managed care" (ie. any type of network arrangement including Preferred Provider Organizations, Health Maintenance Organizations, and Point of Service organizations — also known as PPO, HMO, and POS) and may very well revoke a company's charter to do business in the state should the company be turning down too many legitimate claims.
However, insurance companies are sticklers for following the "standard" for medical care. This is what makes it difficult to answer your question. Because they should not deny anything that's considered standard for care in the given circumstances (should not and will not being two completely different things, of course.) And there may be several options that would be considered "standard." If the patient wants treatment that isn't yet considered "standard", they would balk. Period.
Multiple member LLC's can be taxed 3 different ways:
1. As a partnership
2. As a C corporation
3. As an S Corporation
The deductability of health insurance premiums for your LLC will depend on which of the 3 types of entities your LLC elected to be taxed at (the default is the partnership form of taxation).
Typically, you will be able to deduct 100% of your health insurance premiums although there are some specials considerations for owner/officers of S Corporations who own more than 2% of the company.
If you speak with a CPA or qualified tax advisor they should be able to give you plenty of good tips. One thing that you may want to mention is a medical reimbursement plan. Here is some more detail on medical reimbursement plans: