Health Savings Accounts (HSA) - How Do They Work?
An HSA is comprised of two parts:
A Qualified High Deductible Health Plan & A Health Savings Account
1. A Qualified High Deductible Health Plan (QHDHP) is a comprehensive major medical plan with no co-pays. The idea is to have an inexpensive health insurance plan that doesn't pay for the first several thousand dollars of health expenses. This is where the Health Savings Account comes into play. A QHDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account.
2. The Health Savings Account (HSA) is a tax-deferred savings vehicle. The funds accumulating in this account can be used for Medical Expenses ONLY! (e.g. Deductible, Coinsurance, Prescriptions & other qualified medical expenses.) This savings account is the property of the insured & it is controlled solely by the insured. The HSA is a portable product & accumulates tax free until retirement age is reached. To be eligible for an HSA you must use a QHDHP.
posted by Mike @ 11:03 AM
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