Individuals and especially families can save thousands of dollars per year by using a Qualified High Deductible Health Policy in conjunction with a tax deductible Health Savings Account. The first and biggest misconception to overcome is that a Health Savings Account or HSA is not a Flexible Sending Account or FSA. Many people have had a FSA though their employer and have lost money with them. That’s because a Flexible Spending Account or FSA is a “use it or lose it” account. Any money left in your account at the end of the year is forfeited. With a Health Savings Acccount or HSA the money in your account does not go away at the end of the year. It continues to grow with interest and you can use the money in your account to pay for any eligible medical, dental, vision, orthodontic, or prescription expense with tax free dollars. That’s because money contributed to the Health Savings Account or HSA is tax deductible up to $5,800 per family (2 or more members) or up to $2,900 for an individual per year.
Two recents families come to mind. One self employed family was paying $1,400 per month for their health insurance. It was a family of four with no medical conditions and they were not going to have any more children. I recommeded a HSA health insurance policy with Regence BlueShield with a premium of $344/mo. and a combined family deductible of $5,000. The family saved $1,056 per month. Now they can open up a tax deductible Health Savings Account and make a tax deductible contribution of $5,800. The $5,000 deductible is combined for the whole family of 4 and the maximum out of pocket for this plan is $10,000 which is less than their annual savings of $12,672! The family can build up their HSA by contributing $5,800/yr to help pay for any expenses now or over their lifetime while they are on Medicare. Fidelity estimates that a couple will spend $180,000 over their lifetime after age 65 on Medicare for co pays and deductibles for medical, dental, vision, and prescription expenses. The family still has an extra $6,867 or $572.66/mo left over after the premium and the contribution to their Health Savings Account to put toward a retirement plan.
The other family had a plan with Costco and they were in a similar situation paying $1,500 per month. I recommended a HSA policy with Group Health Cooperative for $277 for the entire family of four. That’s a savings of $1,223 per month!. An HSA plan may not be the right plan for you, see my website for information and quotes on other options in Washington. For more information please visit www.rlmassoc.com
