Ohio HSA Plans
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Ohio HSA Plans Health Savings Accounts
The government will help you pay for your
health insurance through tax deductions.
You do not have to itemize to get these savings.
Health Savings Accounts (HSA Plans) are a byproduct of the new Medicare pharmacy bill. They permit anyone the opportunity to use pre-tax money to pay for their medical expenses. The tax advantages and the lower cost of the health insurance premiums, make HSA plans an attractive health insurance choice.
If you are self employed, the premiums you pay for the insurance are deducted as a business expense. The contributions you make to your health savings account come right off the top and reduce your gross income dollar for dollar.
What is a Health Savings Account?
A Health Savings Account (HSA) is a trust or custodial account, and may be offered by insurance companies, banks, and organizations approved by the Internal Revenue Service (IRS). It is combined with a low-premium/ high-deductible insurance policy, designed for individuals or families in order to fund health care expenses and medical insurance. Participants are encouraged to invest the premium savings in a health savings account by making tax-deductible contributions to the HSA. Medical expenses are paid out of the account until the deductible is reached. Unused monies in the account may be rolled over tax-free and may be invested to pay for future medical expenses and more general uses after retirement.
To avoid confusion let me restate it another way
Many people confuse the two money streams. You are paying an insurance premium every month for a high deductible PPO plan. At the same time you are putting additional money away in a special savings account. The money you spend on premiums can be a business deduction. The money you put into the savings account is deducted from your gross income. It is an above the line deduction sitting right there on your 1040 return.
Will an Ohio HSA plan save me money?
You have to remember that an HSA plan has a high deductible and you will pay for most of your expenses out-of-pocket. The contribution you make to your health savings account can significantly offset the cost of the plan. If you make a sizeable contribution each month to the savings account then the tax savings could make this plan a winner. Especially when you consider the tax deferred growth of the money. However, if you are going to contribute $25 each month then the tax savings is minimal and this plan might not be for you.
Look at the potential savings with this example:
Health Savings Plan for Family (any size from 3 to ..) This plan has a $2,000 family deductible. We are assuming a 28% tax rate.
Monthly Cost of Insurance $ 220.00 (monthly premium)
Health Savings Deposit $ 166.66 (1/12 of $2,000 deductible)
Total Monthly Cost $ 386.66
Tax Deduction for Insurance (Insurance Rate x 100% x 28%) $ 61.60
Tax Deduction for Savings Deposit (Savings Deposit x 28%) $46.66
Total Tax Savings $ 108.26
Cost After Tax Savings $ 278.40
But of the $278.40 cost, $166.66 is still your money sitting in the savings account earning interest. You never gave it to the insurance company.
The Net Monthly Cost of Insurance after Taxes is actuall $ 111.74
This is why I love these plans.
What is covered with the HSA plan?
This is a traditional Ohio PPO plan and it covers what most major medical plans cover. However, in addition to usual medical expenses, you can use the money in you medical savings account for:
- Medical expenses as defined by IRC § 213(d), including but not limited to: physician’s visits, Rx drugs, chiropractic, dental, vision, many “alternative” therapies such as acupuncture, and of course all other traditional in-patient and out-patient medically related expenses.
- COBRA premiums
- Health premiums paid while individual is receiving unemployment compensation
- Long-term care insurance premiums
Who is eligible for an Ohio HSA?
Just about every tax payer with a qualified HSA plan.
What Are the Benefits of an HSA
You save more money with high deductible medical insurance. The first $1500 to $2500 of medical insurance benefits cost more in premiums than is returned to you in claims. In contrast, the money paid for health care through an Ohio HSA will be subject to nominal administration fees.
Typically, a family might spend $5,000 a year in health insurance premiums and get less than $500 in actual benefits. If you cut your premiums to $3500 a year and put the difference in your Ohio HSA savings account, you will not only lower your premiums, you will have also lowered your taxable gross income by $1500. It is a win-win situation.
2. Better Choices
HSAs preserve freedom of choice in terms of choosing doctors, hospitals and other health care providers. Patients become consumers of healthcare without the need for referrals, co-pays, etc. Also, a physician's choice of therapies can be made based on their value to the patient, not on the basis of the patient's limited insurance coverage.
3. Increased Access to Services
Certain services not typically covered under traditional benefit plans, such as long-term care, eye-care and dental care, can be accessed through an HSA. HSAs place fewer restrictions on the range of medical services covered.
4. Better Patient-Physician Relationships
With a HSA plan, the physician-patient relationship is freed from the intrusion of third-party payers. Physicians don't face external pressure to withhold beneficial care or to obtain third-party authorization for proposed treatments, an often time-consuming process.
With a HSA, you may carry balances in your account over from one year to the next. If medical expenses are low, the HSA allows you to accumulate and invest funds tax-free. HSA balances can become important savings vehicles for purchasing long-term care insurance and other post-retirement needs not covered by Medicare.
Who can make contributions to a HSA?
Either a qualified individual or an employer can make contributions.
How much can I contribute to my HSA?
100% of the annual deductible prorated for the month of the year we are in.
Can I invest the money any way I want?
Most HSA plans offer a savings account that pays an interest rate higher than the current bank rate. There are other companies that are set up to handle this savings account for you and permit a broader range of investments. The idea is though, to have the money available for medical expenses and not flush it down the toilet with the latest dot-com stock.
What happens to my HSA at the end of the year?
The money in your account belongs to you. You can roll the money over for future medical expenses or save for retirement.
How do I get money out of my HSA for medical expenses?
Some plans use a checking account and others a debit card. You can also write a personal check and reimburse yourself from your HSA account.
How do I get a Ohio HSA Plan?
Unfortunately, many health insurance agents and carriers have avoided Health Savings Account plans. SInce the premiums for these plans are lower, many commissioned agents do not sell HSA plans. It also requires more than an "order taker" to properly explain these plans and how to best utilize their features. Use the Get Quote button at the top of this page to reach an HSA specialist or call us direct at 800-272-0512.
Is an Ohio HSA Plan right for me?
- A desire not to pay high health insurance premiums
- A desire to reduce federal income taxes
- The willingness to assume the risk inherent with a higher “deductible” amount (offset by lower premiums & taxes)
- The discipline to fund the savings account instead of over-paying for traditional health insurance
- The ability to sleep at night without any “co-pays” for little bills (if this is not you, then the HSA is not for you!)
- An interest in saving additional tax-sheltered money toward retirement
Call us at 800-272-0512 for a fast, free quote.
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