What is the benefit of a Health Savings Account (HSA) used in conjunction with a High Deductible Plan (HDHP)?

Let’s start with a brief introduction into what a HDHP and HSA are. With a HDHP the participant takes on more initial risk with a higher deductible.  This reduces exposure to the insurance company and results in a lower premium to you.  A Health Savings account (HSA) can be funded using pre-tax dollars, contributed by you, your employer, or anyone else on your behalf.   The withdrawals from an HSA account are tax free, as long as the monies go toward heath related expenses authorized by the IRS.  The HSA acts similar to an IRA and is only taxed if the participant does not use the funds for health related expenses.  Each year the IRS will determine the amounts allowable to contribute to the participant owned bank account.

You can certainly opt to have a HDHP without electing to have a HSA, although you might be losing the trip tax advantages described below.  There are insurance coverage plans that will provide for office co-pays and drug benefits, similar to conventional PPO arrangements.  For some people, that allows protection for catastrophic coverage and continuing preventive and routine medical care at a lower premium than plans with lower deductibles.

Consumers can purchase a HDHP and open an individual HSA in both the individual and group markets.  The money is contributed tax free to the HSA, the money is allowed to grow tax free and the money is withdrawn tax free, provided it’s used for a qualified medical expense.  While there are pros and cons to having a HDHP coupled with an HSA account, Hipskind Seyfarth Risk Solutions can help determine which plan is right for you.

HSA Limits for 2014 and 2015:

HDHP Minimum Deductible Amount

	2014	2015
Individual	$1,250	$1,300
Family	$2,500	$2,600

HDHP Maximum Out of Pocket Amount

	2014	2015
Individual	$6,350	$6,450
Family	$12,700	$12,900

HSA Maximum Contribution Amount

	2014	2015
Individual	$3,300	$3,350
Family	$6,550	$6,650

Catch-Up Contributions (age 55 and older)

2014	2015
$1,000	$1,000

About Hipskind Seyfarth Risk Solutions

Hipskind Seyfarth Risk Solutions offers a wide-range of insurance products for individuals and businesses of all sizes. HS Risk Solutions, located in Chicago, provides expertise in the area of health and ancillary benefits and property and casualty insurance for businesses and individuals. For more information, visit HS Risk Solutions website at www.hsrisksolutions.com or on Facebook atwww.facebook.com/HSRiskSolutions.