Health Savings Account policy deductible

LM | May 7, 2008

Q: My employer currently offers heath insurance but is changing to a HSA plan. My spouse is also on the policy. If the HSA plan has a Family Plan with $5,000.00 deductible, does this mean $5,000.00 period or does that mean $2,500 for me and $2,500.00 for him. In other words if I reach $2,500.00 in deductibles will I receive 100% coverage or will the two of us combined deductibles have to reach $5,000.00?

A: Health Savings Accounts are governed by federal tax law that require one annual deductible per insurance policy rather than deductibles for each person covered by the insurance. All covered family members' expenses are "pooled" together for purposed of meeting the policy deductible. This means that when more than one family member is covered by the insurance, the total bills incurred by all of the family members much be reached before the insurance pays benefits. For example, if a policy with a $5000 deductible that coves a husband with $4,000 in medical bills and and wife with $3,000 in medical bills, then the first $5000 is applied to the policy deductible and the remaining $3,000 is covered by insurance.

Because of the pricing methods used in Health Savings Account insurance policies, we often recommend having two separate insurance insurance policies when this option is available. Each policy would then have a lower deductible and benefits could be paid sooner. For healthy applicants, the total of premiums for two HSA insurance policies with a lower deductible would be about the same price as a joint policy with a higher deductible. For price comparisons, check Golden Rule Insurance and Celtic Insurance HSA insurance that can be quoted and issued online in most states.

Family-type Health Savings Accounts are appropriate only for those relatively few households who are able to direct at least $400 per month into the savings account.  Some families should not use an HSA plan, especially if the employer is not contributing to the savings account. In those cases, other low cost health insurance options are available through employer plans that provide coverage with a lower deductible.

If you are making contributions the HSA, it is important to have the money deducted directly from each paycheck on a pre-tax basis and automatically deposited directly into the HSA account. If you cannot budget this amount, then perhaps the HSA is not the appropriate type of health plan for you.

More information on the detailss of Health Savings Accounts is available at http://www.healthsavingsaccount-hsa.com.

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