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Thursday, August 6, 2009

Health Savings Accounts

I talk to people each day who are interested in Health savings account. These plans have been effective cost saving options for individuals who want a tax advantage plus get more affordable rates than a traditional plans. Most health savings plans offer free preventative care. So, everytime one goes for a physical, mammogram, pap test, blood or cholesterol screening there is no out of pocket cost to the individual nor deductible to meet. All other services are subject to the deductible.

When people here about meeting the deductible first before anything pays it scares them about taking a HSA. However, what they don't realize is the private insurer work with the doctors and hospitals with negotiated contracted rates so they don't pay full price for certain procedures. For example, let's say an individual walks in to see a a foot specialist and charges them $200 for the exam. The private insurer steps in and says since the member has coverage we will offer you $50 for the whole procedure. Since the specialist contracts with the insurer they agree to the allowable amount and will write off the difference. The member only pays the $50 as it applies to the deductible. Once the member's deductible is reached during the year, then the plan pays 100%.

HSA's are major medical plans so they do protect you for hospital stays, emergency room, outpatient surgeries, urgent care and prescriptions. Usually the plans have deductibles in increments of $1000, $1500, $3000 or $5000. The higher the deductible the lower the premiums. HSA's are a great way to protect the family against catastrophic events and at the same time keep premiums low cost.

If the member chooses, they can also open up an account with their bank and the can contribute monies into the account to pay towards their deductible for medical expenses and it becomes a tax write off at the end of the year.

Contribution Limits for 2009
The individual contribution limit for 2009 is $3,000 while families can contribute as much as $5,950. These dollars can be used to pay for a variety of qualified medical expenses including doctor's office visits, prescription drug coverage, dental bills, meeting the policy deductible, co-insurance, as well as several other items. The IRS furnishes a list of qualified medical expenses at their website.