The high cost of health insurance are here to stay, which led many employers to terminate coverage for employees. For now try to find coverage on their own, an option increasingly popular is a health plan with a high deductible (HDHP) with a health savings account (HSA).
As many people start looking for a new cover, it will soon become obvious to them why some companies have chosen to end the health insurance benefit. Traditional diets, such as those previously offered through benefit programs employers often come with steep monthly premiums. These bonuses are even more pronounced when you buy individual coverage. HDHP use in combination with HSA is a method that can help reduce costs. In many cases, employers who have terminated choose high-cost insurance to offer this as a cheaper alternative.
The potential financial benefits of the combination are twofold. High deductible plan, as the name suggests, are franchises that are significantly higher than those in traditional health plans, resulting lower monthly premiums. The minimum annual deductible is $ 1,200 for individual coverage and $ 2.400 for family coverage. In addition, annual deductibles and other out of pocket expenses can not exceed $ 6,050 for individual coverage or $ 12.100 for family coverage.
Health savings accounts allow individuals to save for medical expenses tax-free. For registered by their employers, contributions to the accounts are usually made of pre-tax payroll deductions. People who open accounts on their own can send contributions to banks sponsorship and then make deductions above the line contributions on their federal income tax. And income funds that have accumulated in the account, and then can be withdrawn tax-free, provided they are used for medical expenses. No use-it-or-lose-it rule, and funds can be carried forward indefinitely to pay for qualified medical expenses.
As with any tax-advantaged account, there are a number of rules and limitations to consider when evaluating an HSA. To be eligible, the individual must be enrolled in a health plan with a high deductible. Eligible individuals may not have another health coverage, although there are some exceptions, such as dental, vision coverage and long-term care. Applicants may also be enrolled in Medicare or be claimed as dependents on the tax revenues of another person.
Annual contributions to a savings account for health, which should be April 15, 2013 for the year 2012 are limited to $ 3,100 for those with one HDHP coverage and $ 6,250 for family coverage. The maximum contribution is $ 1,000 more for people who are 55 years or older. For those who meet the eligibility criteria only for part of the year, the maximum allowable contribution is prorated based on the number of months to be eligible.
HSA distributions used for anything other than medical expenses are nothing taxable ordinary income. In addition, qualified distributions are subject to a 20 percent penalty if withdrawn before age 65. Unskilled after 65 Distributions are subject to income tax, but not the additional penalty is assessed. This feature allows taxpayers are essentially an HSA as a traditional 401 (k) or IRA.
Most insurance companies provide information about opening an account at a specific financial institution as part of the registration process, however, the insured can use any bank or financial institution that offers these services. Many features of this account fees and investment options vary between institutions. Some offer HSA for which the only option is an interest current account, while others may allow contributions to be invested in stocks and mutual funds, similar to a brokerage account. Those interested in raising money in their accounts and treat them like traditional retirement accounts will want guards who offer a wide range of investment options.
Some critics argue that result HDHP decreased the quality of patient care. When you take care of medical expenses to their high deductibles, patients can avoid going to the doctor when they need or can find cheaper options and less effective health care. On the other hand, proponents argue that the plans to make better informed consumers taking a more proactive approach to their health.
These plans are not for everyone, so it is important that consumers understand their medical records and how different health plans may affect their behavior. As a relatively young man in good health, I rarely see doctors for all standard examinations. Accordingly, I am aware of some important savings payments for my HDHP premium compared to a traditional health care plan and often have significant medical expenses from their pocket. I understand that if I have a serious medical problem, I'll be on the hook to pay my full deductible, but the plan is in place to prevent a catastrophe far above that amount scenario. However, an HDHP may be less appropriate for a person with medical problems that will eventually pay the full deductible every year.
As with any important decision, you should take into account the personal and financial behavior when choosing a health plan. But for many, the combination of a health plan and savings account high deductible health could be a good fit.
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