HSAs

Posts Tagged: HSAs

How to Start a New Health Plan Off on the Right Foot

Welcome to a new year, with new health benefits. You just chose a new health plan and now it’s in full effect. But most people don’t have a full understanding of how their benefits work. This means that many of them end up losing money in their spending accounts, paying more for care, or getting claims denied.

Follow these tips to make sure you start off 2013 right.

Plan for your Deductible
Guess what–deductibles have gone through the roof over the years, so that often means more cash out of your pocket. If you are one of the 65% of people who have a high deductible health plan, it’s especially important for you to plan your spending. High deductible health plans (HDHPs) come paired with Health Savings Accounts (HSAs), or accounts where you can save money just for medical expenses free from taxes. To be best prepared, you should plan to save at least the amount of your deductible in your HSA as soon as possible.

Network It
Most health plans have some restrictions on what providers you can see or they cover much more on visits to in-network providers. Find out the type of plan you have and whether you have a provider network. HMO plans are the most restrictive–don’t even think about going to a non-network provider unless you want to pay the full cost. PPOs have some more flexibility, but services in-network will be less expensive. POS plans give you more freedom, but often involve more paperwork for out-of-network visits. And finally, FFS plans allow you go to any provider you want, but few companies offer this option anymore.

Get Spent
Did you sign up for an FSA or HRA? Don’t forget about the money in your account. These funds disappear if you do not spend it by the end of the year. Do some planning now by finding what eligible expenses you expect this year so that when they come up, you’ll know to pay with your FSA or HRA, insteading of other funds. If you have an HSA, the same “Use it or lose it” rule does not apply. Your savings will roll into the next year.

Practice Prevention
All health plans must cover a list of dozens of preventive care services, all free of cost. Get your money’s worth by checking out the list and asking your physician what they recommend. Even if you have a high deductible plan and you have not met your deductible, you can still get these services completely covered, as long as you don’t have a pre-existing condition that already required one of these tests or screenings. Learn more about preventive care here.

Have a Non-Emergency Plan

What do you do on the weekend or in the middle of the night when you’re not sure if a medical condition is serious enough for the ER or can wait for a doctor’s appointment?  Most health plans have a variety of options for these uncertain situations such as nurse advice lines or extended-hours urgent care. Know your options so that if you’re caught in the situation, you can choose to avoid an expensive ER visit. Of course, always go to the ER if you are having a life-threatening emergency.

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Before 2013: Squeeze Extra Dollars Out of Your Health Benefits

Before the new year rolls around, putting some attention towards your health benefits can save you a lot of money. Quick! You have limited time to make the most out of your health plan for 2012, and then to get ready for 2013.

Spend down your FSA or HRA 

If you have a Flexible Spending Account or Health Reimbursement Account, check on the date it rolls over (for most of them, it’s January). You’ll lose the funds if you don’t spend them in time. Some employers offer a grace period until March 15th, but after that date, the money disappears. See what expenses can be counted.

Don’t confuse your HSA. These funds stay with you year after year!

Take advantage of your deductible

Most plan deductibles also roll over at the end of the year. If you have already met your deductible, think about whether there are any other services or procedures you need to do soon. Scheduling them before the year ends might save you from having to pay completely out of pocket in the new year.

Fund your HSA

If you have an HSA, you already know that the money that goes into it is free from taxes. Did you also know that you can keep depositing up until April 15th and your contributions will count towards your 2012 income? That means you can add more funds if you didn’t deposit enough this year or aim for the maximum contribution to get the most tax savings.

Review next year’s plan

It’s time to look at what’s new for your health plan (or all the important details if you switched plans!). The top benefits to focus on? The deductibles (individual and family, as well as in-network and out-of-network), any changes to the drug formulary, and any changes to the provider networks. These last two rule changes often surprise consumers who think their plan will be the same as it was last year.

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How Does Your HSA Compare?

Wondering how your HSA stacks up compared to others?

Are you saving enough or spending too much?

We decided to look at Simplee users as a group to see. As of the end of June 2012, the average Simplee member had $1654 in their HSA. This was up from $1385 at the beginning of the year, but not quite as high as the average of $2235 the previous fall. That seems to suggest many people are saving up as the year goes on and then paying out their deductible by the end of the year.

The good news? Most consumers seem to be saving more than they’re spending. For the first half of 2012, Simplee users contributed an average of $2289 each quarter to their HSA and only distributed $1903 per quarter.

So how much should you have in your HSA? Well, just like any savings account, the more the better—but of course, within reason. You obviously don’t want to tuck away so much money that you can’t afford your other bills. But at the very least, you want to have enough to cover your deductible.

The average American has $1490 in their HSA (as of 2011, according to the Employee Benefits Research Institute), so it looks like Simplee users are doing a bit better than average. Way to go!

To track your HSA transactions and manage your expenses easily, log in to Simplee.

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Six HSA Tips for Beginners

This post originally appeared on Mint.com. 

High Deductible Health Plans paired with Health Savings Accounts (HSAs) are one of the fastest growing types of plans.

Just opening an HSA or still trying to figure out how yours works? Many people find the idea of managing not just a health plan, but now a health plan with a linked savings account a little more daunting. How much should you save? What can you spend the money on?

An HSA doesn’t have to complicate life. If you can get behind a few simple tips, you could be on your way to big savings.

WHEN: Open your HSA right away.

Don’t wait until you have medical expenses. Any expenses that you incurred before you opened the account won’t qualify for reimbursement.

HOW MUCH: Max it out first.

In general, you can take advantage of the full tax benefits of and HSA by contributing the maximum allowed—within reason of your budget of course. HSAs have the best tax benefits compared to IRAs or 401ks. You never pay taxes for contributions, interest, or distributions, so put the maximum contribution in your HSA first. The exception is if your employer matches 401k contributions—then, it’s best to put your money in the 401k up to the matched amount.

WHO: Spend on you, your spouse, your dependents.

If you have family health insurance, you can pay for your spouse’s medical expenses with your HSA even if your spouse doesn’t share the HSA.

WHAT: Get your medical supplies.

Check out what purchases you already make that qualify as HSA expenses. You can use your HSA on items such as bandages, crutches, contacts and contact solution, or breast pumps and lactation supplies.

WHAT: Pay for premiums.

In general, you can’t use HSA funds on health insurance premiums but there are some exceptions:

  • COBRA benefits
  • Medicare premiums
  • Insurance premiums after age 65
  • Long-term care insurance.

WHAT: Finally, don’t spend it at all.

Instead, pay your medical bills with non-HSA money. Sounds counter-intuitive, right? Didn’t you save that money just so you could use it on health care? While this is the purpose of an HSA, you also have the option to just let the money grow. HSA funds grow tax-deferred, so you won’t pay any tax ever unless you use the funds to pay for non-medical expenses (at least until age 65).

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Health Savings Plans: Making Sense of HSAs, HRAs, and FSAs

This post also ran on the Mint.com blog.

Did you eyes glaze over a little when you read that headline?  Well, sign up for a health care plan these days, individual or employer-sponsored, and that is the kind of alphabet soup you might have to wade through. More and more companies are looking to cut costs by offering high-deductible health plans (HDHP), also known in the industry as consumer-driven health plans (CDHP).  These plans feature lower premiums in exchange for a higher deductible—the part of care you pay for out of pocket before insurance kicks in.  They are often paired with some sort of savings account that allows you or your employer to set aside money to cover your expenses.

These savings plans can make a lot of sense from a tax-savings standpoint.  Funds can be set aside pre-tax or, if they are contributed later, deducted from taxes, so in effect any time you use the money to pay for your medical costs it is like you are getting a discount equivalent to your tax level.  That’s why it could be a smart move to set one up even if your employer doesn’t offer it as a benefit.

So which plan makes sense for you (if you have a choice)?  Let’s decode some of the TLA (three-letter acronyms):

HSA: Health Savings Account

Health savings accounts (HSAs) are a popular employee benefit: over 40% of companies offered an HSA in 2011, with 12% more expected to do so in 2012.

How it works: HSAs allow you to set a portion of each paycheck aside into an account that accrues interest like an IRA.  Employers or other people can also contribute to the account.

Who can have an HSA: Only people covered by a high-deductible health insurance plan, defined as a deductible of $1,200 for a family or $2,400 for a family.  If your employer doesn’t offer an HSA you can open one up on your own, so these are ideal for the self-employed.

What it covers: Qualifying medical expenses such as deductibles and co-payments.

Carry-over and portability: You own the funds that go into an HSA, and anything that you don’t use carries over from year to year.  If you leave your job you can take the funds with you.

HRA: Health reimbursement account

While an HSA is like an IRA in that it’s an investment owned by an individual, a health reimbursement account (HRA) is a benefit offered by an employer that ends when the employment does.

How it works: Only employers may offer HRAs, and only they may put money into it.  The money is not considered income, which means that it is not subject to income or payroll taxes.

Who can have an HRA: An HRA can be used with any kind of health plan.  You cannot open up an HRA on your own.

What it covers: An HRA is the only type of plan that can be used to pay insurance premiums as well as medical expenses.

Carry-over and portability: The funds in your HRA belong to your employer, and when you leave your job any funds in the account stay with them.  Your funds might roll over year-to-year or they might not; that is up the employer.

FSA: Flexible savings account

Flexible savings accounts are like HRAs in that they are employee benefits, and employees can only use the funds as long as they are employed.

How it works: Unlike an HRA where employers fund the account, with an FSA the employee funds the account with a portion of each paycheck.  The money is set aside pre-tax so you get tax savings, but it does not accrue interest.

Who can have an FSA: An FSA can be used with any kind of health plan, but you cannot open up an FSA on your own.

What it covers: An FSA may only be used on qualified medical or dental expenses (not premiums).  As of 2011 you cannot use FSA funds on OTC medicines without a doctor’s prescription.  In 2013, there will be a cap of $2,500 on the total funds in an FSA.

Carry-over and portability: An FSA is a “use it or lose it” plan; any unused funds in the account at the plan’s year-end are forfeited back to your company.  You also lose access to the funds at the end of your employment.

You may even come across a couple of other options, such as an HIA (health incentive account) or an RRA (retirement reimbursement account).  Whatever you encounter, just look at how the plan gets funded, what it covers, and whether you get to roll over or keep the funds.  Track deposits and expenditures carefully, keep receipts for tax purposes, and enjoy your savings!

 

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