Preparing for the future means protecting yourself and your loved ones, especially when it comes to healthcare needs. Ideally, your medical insurance in Seattle, WA, should cover everything from your annual Wellness Exams to your complex medical needs. Medical insurance is expensive, so how can you get a better bang for your buck?
HSA and HDHPs: How They Work
One way to help protect your pocketbook and to assist in funding future medical expenses is a Health Savings Account Plan. Health Savings Plans (HSAs) work in tandem with High Deductible Medical Plans. High Deductible Plans (HDPS) are where you pay the deductible first before your health plan picks up part of the cost of medical bills through co-insurance. There are NO CO-PAYMENTS under these HSA plans.
For 2020, the IRS defines HDHPs as any plan with a minimum deductible of $1,400 for individuals and $2,800 for families. This number changes every year. Both Individual plans and many employer plans offer HSA choices.
An HSA allows you to save money on a pre-tax basis to pay for qualified healthcare fees like deductibles, coinsurance, and copayments. They can also be used for dental and vision expenses, ranging from covering braces to eyeglasses, Lasik, and even first aid kits!
When an HSA is paired with an HDHP, the money deposited not only becomes tax-free, but it also earns tax-free interest. By adding money to your HSA, your annual taxes are also reduced for each year you contribute. In the year 2020, individuals can put in pre-tax dollars up to $3,350, families up to $7,100, and individuals over age 55 can add $1,000.
How HSAs with HDHPs Cut Healthcare Costs
Health Savings Accounts are also a great way to set aside money for unexpected healthcare costs in the future. Dollars not spent can roll over and grow year after year in an HSA account. The money can also be invested in mutual funds.
An HSA is also a great way to prepare for retirement. While you can no longer contribute to your HSA once you’re over 65 years old, you can still use its savings for out-of-pocket medical costs. The money stays tax-free if it’s used for qualified healthcare expenses. Account-holders also can tap the account for nonmedical expenses without penalty; however, they will have to pay income taxes on the withdrawal amount.
If you are over age 65, HSAs can also be used to pay a premium for certain kinds of Medicare plans in Seattle. Your HSA money can be used to pay premiums for Medicare Part B and Part D. It also can be used to purchase a Medicare Advantage plan. Another great benefit is that you can take tax-free withdrawals to pay a portion of long-term-care insurance premiums based on your age.
Health Savings Accounts and High Deductible Plans have grown dramatically over the past few years. Seventy-one percent of large and mid-size employers are offering HSAs and HDHPS, while 37% percent of small employers also in the game. Nearly 30% of covered employees are enrolled in an HSA plan, accounting for $22 billion worth of contributions.
Explore Your HSA Options with Guyer Benefits NW
HSA coverages vary, it can be tricky to determine the right one for you.
Guyer Benefits NW will help you find the plan with the most comprehensive coverage, one that factors in emergencies, your healthcare needs, and the costs of the facilities close to your residence. You can also trust us for customized medical, life, travel, vision, disability, Seattle, WA dental insurance, and more.