Texas Health Savings Accounts 101
How HSAs Work
Definition of HSA: A health savings account (HSA) is an account that allows individuals to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax free basis. Health Savings Accounts were created by H. R. 1, the "Medicare Prescription Drug, Improvement and Modernization Act of 2003," which was signed into law in 2003.
HSA components
Health Savings Account-based Insurance plans have two parts:
- A High Deductible Health Insurance Plan
- A Health Savings Account or HSA
Before you can open your Texas HSA, you must first obtain a high-deductible health insurance plan. Your friendly Consumer Benefits Group agent can help you compare HSA insurance providers in Texas to find the right plan for you.
Health Savings Account Benefits
HSA plans help you save money in three primary ways:
- Lower Health Insurance Premiums: The premise of an HSA plan is that an insurance plan with a higher deductible gives you, the consumer, a significantly lower premium. By choosing this high deductible plan, you free up money that you would have otherwise spent on premiums. The savvy investor will take this premium savings and use it to contribute money into their Health Savings Account.
- Interest Income: As with all savings accounts, you reap the rewards for saving via interest income or by returns on investments of your savings into qualified funds.
- HSA Tax Savings: A Health Savings Account is essentially an IRA for health care. All contributions that you make into your HSA are tax deductible. The money you withdraw from your HSA for your qualified medical expenses is also tax free. This means that you don't pay taxes on funds going into or out of the health savings account.
HSA vs. PPO health plans
A primary difference between HSA-compatible plans and PPO plans is that instead of having copays for doctor's office visits and prescriptions, you will use the money in your Health Savings Account to pay for these minor expenses. However, since you will be insured by a major Texas HSA provider, you will still enjoy the network discounts offered by your insurance provider for these services.
Health Savings Accounts were designed to put consumers back in charge of their health care. By assuming some of the smaller healthcare costs in your life, you can enjoy considerable savings while still maintaining excellent major medical/catastrophic coverage for unforeseen medical emergencies and illnesses.
Interested in Texas Health Savings Accounts? Call Consumer Benefits Group today, or request a free HSA quote.
Article written by Danielle Kunkle, a licensed Texas insurance agent and Certified Estate Planner in Benbrook, TX. You may contact Danielle directly for more information at 817-249-9600.
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