An HSA medical plan is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. It is typically paired with a high-deductible health plan (HDHP), which is a health plan that only covers preventive services before the deductible. By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your out-of-pocket health care costs. HSA funds generally may not be used to pay premiums. Some key features of an HSA medical plan include:
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Lower monthly premiums: If you enroll in an HSA-eligible plan, you may pay a lower monthly premium but have a higher deductible, meaning you pay for more of your health care items and services before the insurance plan pays.
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Tax-free contributions: The money you contribute to the account isn’t taxed as long as it’s used for qualified, out-of-pocket medical costs.
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Roll-over balance: Your HSA balance rolls over year to year, so you can build up reserves to pay for health care items and services you need later.
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Qualified medical expenses: HSA funds can be used to pay for qualified medical expenses, which include medical plan deductibles, diagnostic services covered by your plan, Medicare Part B and long-term care insurance premiums, and other health insurance premiums if you are receiving Federal unemployment compensation, LASIK surgery, and some nursing services.
Its important to note that not all high-deductible health plans are qualified for use with an HSA. The Internal Revenue Service (IRS) defines what makes a plan qualified, and these requirements can change, so its important to check that your high-deductible plan is a qualified high-deductible plan.
