Pennsylvania High Deductible Health Plans (HSA) are an affordable medical option that can reduce your premiums, help you take advantage of tax deductions, and provide greater control over your healthcare. Typically, these plans save you approximately 25%-45% in premiums, when compared to more popular copay options. Each year, more Keystone State consumers purchase them, and they are eligible for federal subsidies, if you qualify.
Although Affordable Care Act legislation has created guaranteed benefits (with federal tax subsidies), medical plan prices continue to increase (sometimes substantially) for many consumers, especially those that earn middle and upper-level incomes. It is this group that can be most aided by the HDHP and HSA.
In 2016, the maximum out-of-pocket limits are $6,550 for single plans and $13,100 for families. The minimum annual deductibles remain at $1,300 for individuals and $2,600 for families. However, higher deductible options are generally more cost-effective. The maximum contributions are $3,350 per individual, and $6,750 per family. However, any person that has reached age 55, can contribute an extra $1,000. The “bonus” amount is also tax-deductible.
More Employers Offering HDHP Options
Many large and small employers are also switching to this concept, by adding HDHP options along with the traditional PPO and HMO plans. Because the cost is lower to the employer, contributions are made, often as much as $3,000. These funds can be used for medical, dental, or vision expenses. Employees can also contribute into the account. The National Bureau of Economic Research also gave its stamp of approval, by publicizing a study that verified that companies effectively reduced healthcare costs by offering HSA options.
Although over-the-counter drugs are no longer deductible and the penalty for early withdraw has increased to 20% (from 10%), this type of plan is often a big money-saver for corporations. FedEx, with more than 400,000 workers, already converted to an HSA-style system. Workers are given a “credit” to deposit into their account while additional funds can be payroll-deducted. The combination of incentives and rewards, over time, has become very popular with workers.
You can view the policies that are the most competitive in your area, and easily understand coverage. You’ll be able to quickly compare the best HDHP policies and determine if its best to select a more traditional plan, or an HSA. We also make it easy for you to enroll, since missing a deadline may force you to keep a policy you don’t want. There are also many new available options each year that may become more cost-effective for you.
What is an “HDHP?”
Utilized with a Health Savings Account (HSA), it is an alternative to your traditional medical insurance. Created in 2003, it is a savings policy that offers a different way for consumers to pay for their expenses. Pennsylvania HSAs permit you to pay for current expenses and also accumulate money on a tax-free basis. Qualified medical, dental and vision expenses are all eligible. Do you need new glasses or contact lenses? Or is it time for your six-month dental checkup? You can pay for these expenses with money from your account.
These types of policies remain very popular through the Pa State Marketplace thanks to IRS 2013-57 which states that HSA qualifications have been met (under IRC Section 223 (c) (2) despite preventive benefits covered at 100%. Previously, it was feared that since routine annual physicals (and other benefits) were covered in full, the tax deduction would be lost. This, thankfully, did not occur.
Often, you are issued a debit card to assist in the record keeping process. You can view statements online or receive a monthly statement in the mail. It becomes very simple to manage your account. And the healthier you are, the more your personal fund grows.
If you are self-employed, it’s a great way to handle your medical benefits. We have more information for the self-employed and small business owners. Depending on how you file your taxes, you may also be able to deduct the premiums for the actual policy (in addition to contributions).
You must have a “High Deductible Health Plan” (HDHP) to take advantage of an HSA. An HDHP costs less than a typical policy. Ideally, the money you save on insurance can then be deposited into your account. As you manage the money in your HSA, you decide the type of investments you make into the account.
Although selecting the “fixed” account is your safest option, often a “variable” option will yield greater returns over a longer time period. However, since it involves investing in securities, and thus, a higher risk, potential rates of return are not guaranteed, and the possibility of losing money exists. Typically, it is advisable to avoid risks with funds
Don’t Lose It If You Don’t Use It
At the end of the year, you do not forfeit any of your funds that were not used. Often, you may make larger deposit amounts before April to take advantage of reducing your potential tax liability. If your actual medical expenses for the calendar year were significantly less than anticipated, you may have hundreds (or thousands) of dollars in the account by the end of December. Thankfully, these funds simply “roll” into the new year without consequence, tax liability or penalty.
You are not under an obligation to set up the account or make any deposits into the account. There are also many single and married persons that wait years before they make any deposits. Often, it is just prior to having a family and utilizing maternity coverage that may require significant out-of-pocket costs, if the existing policy is a Bronze-tier plan.
Actually, the high deductible portion is sometimes referred to as a “catastrophic” plan. Normally, this type of coverage does not cover the first several thousand dollars of medical expenses (often known as “the deductible”). However, after the deductible, coverage is often 80%-100%…depending on the policy.
All Pennsylvania HSAs have “first dollar” coverage for preventative benefits and higher out-of-pocket expenses for non-network expenses. And a negotiated-network discount will reduce your expenses that are subject to the deductible. The savings is often hundreds or thousands of dollars on typical procedures. For example, a CT-Scan may originally be billed at the retail price of $950, and later repriced at $400. Or, a more complex scan might be repriced from $2,600 to $1,700. Those are big differences.
Normally, deductibles of $3,000-$6,000 are the most popular. However, there are a few carriers that offer deductible options as high as $8,000 or $11,000. Since you typically do not meet the deductible, many persons choose to pay the lowest available price by raising the deductible.
What is the cost of a policy?
Technically, an HSA is not a policy you buy. It is a savings account that allows you to deposit money on a tax-deferred basis. When you have coverage, the only policy you purchase is the HDHP, which is an inexpensive plan that covers your medical expenses if they exceed the funds you have.
Monthly premiums will vary, depending on the insurer. In some areas, a policy from Aetna may be the best option. Yet, in other areas, UnitedHealthCare, or another company such as Keystone may be the better choice. Highmark in Western Pennsylvania and Independence Blue Cross in Southeastern Pennsylvania offer very competitive rates. Geisinger is a great option in the Harrisburg area.
What is the best way to purchase coverage?
You can obtain free quotes (the quote section is near the top of the page) or if you would like to talk to a live person, simply call us at (888) 513 6446. We’ll review the options that are best for you and email you the specifics in writing.