January 1, 2010

Q: We live in NJ and we are hoping to sign up for a HSA account. Can you please help us. We have tried contacting our agent and cant seem to make any headway on this issue.


A: Health Savings Accounts are not offered by insurance agents in New Jersey because they are not commissionable transactions. But you can easily complete the enrollment on your own following these instructions.

Keep in mind that there are two distinct steps to starting a new Health Savings Account:

1) Enroll in the qualifying high deductible insurance, and then

2) Open the tax-advantaged savings account at the bank or investment firm of your choice. 

The second step (opening the HSA account) is fast, easy and inexpensive, but the first part (finding insurance) is very expensive in New Jersey. Unfortunately, without the qualifying insurance, the savings account is not allowed.

To find insurance, see the NJ Department of Banking and Insurance Web page titled New Jersey Individual Health Coverage Program Rates. Rates from all of the insurance companies in the state are updated monthly and are available for download. Enrollment is relatively easy; you simply use the contact information provided on that Web page to request an enrollment kit by mail. The least expensive family insurance coverage is over $1,000 per month. All insurance is guaranteed issue, so there is no question of acceptance. Simply sent the completed application with the initial premium check.

Once the insurance is established, it is easy to open a health savings account. Use the free resources at www.healthsavingsaccount-hsa.com to open a no-fee simple bank account or check out some of the more elaborate investment options with Vanguard Group and others. The HSA application asks you to reference your insurance by policy number and the issue date so that the account administrator can verify eligibility.

Optionally, some families also take out supplemental accident insurance. This is not part of the Health Savings Account but is an inexpensive way to reduce some of the financial risk and provide peace of mind when using this type of catastrophic health insurance. Make sure that the supplemental insurance clarifies that it is allowable with an HSA to ensure that your HSA tax benefits remain intact.


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