Health savings accounts (HSA) were created to help you pay for rising cost of medical bills. Not to be confused with flexible spending accounts (FSA), your HSA allows you to put money away, tax-free, and use those funds strictly for eligible expenses.
However, health savings accounts can’t be used on their own, they need to be paired with compatible health insurance plans. Here’s what you need to know.
What Does HSA Compatible Mean?
The HSA can only be used with high deductible plans. The advantage is that this combination delivers additional tax benefits. Therefore, you need to look for high deductible plans that are HSA compatible.
Criteria For Compatible Health Insurance Plans
The Internal Revenue Service (IRS) has established the criteria for what is HSA compatible. What are these? These are the 3 primary IRS criteria that will determine if a plan is HSA or not:
- Out-of-Pocket Expenses
- Acceptable Coverage
It is important to note that the IRS might adjust these limits each year. These are cost of living adjustments (COLAs) to account for higher inflation. The following IRS limits are for 2018.
For deductibles, the requirement for self-only coverage is $1,350 and for family coverage, it is $2,700. The 2018 IRS out-of-pocket maximums are $6,650 for self-only coverage and $13,300 for family coverage. The IRS acceptable coverage for 2018 is $3,450 for self-only coverage and $6,900 for family coverage.
Pairing Your HSA With Compatible FSA
Every year, your HSA will roll over and accumulate for the next year; your FSA doesn’t do that. The Affordable Care Act (ACA) did allow you to carry $500 to the next year. A medical FSA can be paired with an HSA. Compatible ACA plans must cover essential health benefits (EHB) for ambulances, emergency, hospitalization, maternity, mental health, prescription drugs, rehabilitation, laboratory services, preventative and pediatric services. Each state has its own benchmark for these compatible ACA plans.
Does Your Health Savings Account Work With PPO?
Your preferred provider organization (PPO) will determine which in-network doctors and hospitals, you can go to. These are the facilities that might offer discounted rates.
Unfortunately, healthcare reform takes time and there may be gaps between coverage.
Compatible gap plans can provide a bridge from one healthcare policy to another. These compatible gap plans are short-term band-aids. Compatible gap plans are limited to 3 months maximum. Once the plan expires, you will no longer receive benefits therefrom.
What About With An HMO?
Your health maintenance organization (HMO) will have in-network doctors, who might give you a discounted rate. Usually, with an HMO, you will need to select a primary care physician, who will be a gatekeeper. You must see this primary care physician first; you must pay him a monthly fee to keep him as your primary care doctor.
Thereafter, this doctor can refer you to specialists. Therefore, you are somewhat limited as to whom you can see for medical care. But, in exchange, you should enjoy a lower copay. You can use your HSA to pay an HMO doctor. You must find an HMO that is compatible.
Maximize Your Savings With FirstQuote Health
If you have or are looking to leverage an HSA with a high deductible health insurance plan, then look no further. FirstQuote Health can help you find health savings account compatible plans that will be sure to save you money.
Whether you want to just browse available plans in your area, or speak to an experienced agent, FirstQuote Health has you covered. To get free quotes, all you have to do is enter your zip code to get started. Within minutes you will be able to compare quotes in your area, and even get coverage today.