What Exactly are HSAs?

On January 1, 2004 the federal government enacted legislation allowing Americans to set up special Health Savings Accounts (HSA’s) to encourage the new trend towards consumer driven health care.

Basically, an HSA is an individual account that can be set up in conjunction with a qualified individual or employer group sponsored High Deductible Health Plan (HDHP).

By taking back ownership of a small amount of medical risk in the form of a deductible, the insured saves up to 60% on their cost of insurance vs. a comprehensive medical plan. The HSA serves as a tax-sheltered instrument in which the insured sets aside funds to pay down their deductible throughout the course of the plan year. Any unused funds roll over from year to year in an interest bearing account on a tax-deferred basis until age 65.

While an HSA is by its very nature an individually owned account, many employers are beginning to bring in HSA as an option for their employees in employer group sponsored plans. An employer can justify the funding of their employees’ private accounts by virtue of the considerable premium savings the employer realizes by moving to a HDHP vs. the comprehensive plan they are replacing.

When properly planned, an employer can retain the net level of benefits employees are accustomed to while saving a considerable amount in monthly premium outlay.

Please call us for more details on how to put the HSA concept to work!