2019 Guide to HSA
Guide + Wiki Version 1.0
- The guide/wiki will expand
- Wiki in the sense that this post is a gateway to many posts
To lower your healthcare costs you enroll in a high-deductible health plan (HDHP). That's because HDHPs have lower insurance premiums (but higher deductibles).
Since HDHPs have higher deductibles, you can help keep your healthcare costs low by using preventive care and a medical savings account (known as an HSA).
- Most HDHPs cover preventive care (like a physical exam) with zero out-of-pocket. So keeping up with preventive care is a smart way to avoid costly illnesses (and to feel good!).
- You can continue to lower your healthcare costs by using a health savings account. In fact, a high-deductible health plan works best in combination with a health savings account.
Read this guide if you want to learn how to use a tax-advantaged health savings account to pay for qualified medical expenses, save money, and lower your taxes.
Who should read this
This material applies to individuals & families that want to lower their healthcare costs and be financially effective with their high-deductible health plan (HDHP).
It's important that you learn about HSAs if you have (or plan to enroll in) an HDHP. It will help you save big.
If you're in the process of enrolling in an HDHP then choose a plan that is compatible with an HSA. The IRS defines an HDHP as having:
- $1,350 minimum annual deductible for self-only health care coverage and $2,700 for family coverage (both unchanged from 2018)
- $6,750 for self-only health care coverage (a $100 increase from 2018), and $13,500 for family coverage (a $200 increase from 2018)
- Health Plan Terms
- Definition of an HSA
- HSA vs FSA
- HSA vs PPO
- Benefits of an HSA account
- How to qualify for an HSA account
- How to maximize your savings
- How to use your HSA funds
- How to open an account account
- Frequently asked questions
Some Health Plan Terms
Before we move forward, let’s define a few terms you’ll come across when shopping for health plans. If you know these feel free to skip to the next section.
- Deductible: This is what you pay upfront for your medical care before your insurer’s coverage kicks in. Once you meet your deductible your insurer covers a large part of the bill. It resets every year.
- Premium: This is what you pay every month to the insurance company to have health insurance whether you use it or not.
- Copay: Predetermined rate you pay to access healthcare services. With your plan, you could have to pay $20 every time you go to the doctor’s office or a $10 copay for your monthly medication.
- Coinsurance: Once you meet your deductible, your health insurer takes up the bulk of your medical bills. But not all of it. Your co-insurance is the percentage of a medical bill you pay for after you meet your deductible. For instance, with a 25% coinsurance, you would pay 25% of each medical bill, and your health insurance provider will cover the remaining 75%.
- Out-of-pocket limit: But you can’t just keep paying for your healthcare, otherwise in a bad health year even with the best plan you would become bankrupt. Your out of pocket limit is the absolute maximum you would need to pay for your healthcare in a year before your health provider covers 100% of the bill.
Here’s how they all fit together: