HSA Insurance History, Policy, Regulations, And Expenses Covered

HSA insurance

Good healthcare does not come cheap. With high-quality medical treatment comes a hefty price tag, something that people sometimes forget. Although standard medical insurance can cover many medical expenses that men, women, and families often encounter, there are certain expenses that are not covered, which makes a health savings account, or HSA insurance, a solid option for those looking to keep all of their bases covered. With an HSA account, one can be well-prepared for the future while potentially having money to invest much like a 401K.

What Is HSA Insurance?


Setting money aside for the future has always been a good policy, and a health savings account is a way of doing this for healthcare expenses. In a day and age of high insurance premiums, deductibles, taxes, and government regulation of finances, a health savings account allows men and women the freedom to set money aside for future medical expenses, money that is not taxed and can be used for a wide variety of expenses that may not normally be covered by insurance.

Although the history of health savings accounts will be discussed later, these accounts were founded to replace an earlier system where individuals, often self-employed, could set money aside tax-free to cover their medical expenses rather than paying for insurance and potentially having too much insurance coverage. These older accounts, called medical savings accounts, were created after analysts suggested that too much insurance coverage was causing health care costs to go up and that health care costs might actually drop if people paid out of pocket.

HSA vs. Traditional Health Insurance


A health savings account is meant to be the best of both worlds. While health savings accounts, also called HSAs or HSA insurance, recognize how expensive medical costs may be and are not meant to fully replace health insurance, they do give men and women more freedom to choose how much insurance they really need and set money aside tax-free for anything else. This allows people the comfort of knowing that they are setting money aside for potential future medical expenses without sliding down the slippery slope of having too much insurance coverage.

HSA Insurance


So what is HSA insurance? HSA insurance is a type of medical savings account in which money is not taxed at the time that it is deposited into the account, and can be used later on for medical expenses when paired with a qualified high-deductible health plan. As stated, these funds are not taxed at the time they are deposited into the account, and they are also not taxed when withdrawn later. Deductibles are the fees that are paid out of pocket by holders of an insurance policy, and HSA insurance covers many of these deductibles as well as copays and coinsurance.


It is only natural that anyone considering investing in HSA insurance will be curious about what sorts of expenses are covered by the program. Although understanding insurance policies, what is covered and what isn’t, how much you are expected to pay for medications, doctor’s visits and the like, all of that can be confusing, understanding HSA insurance can potentially help you gain more insight into your qualified high deductible health plan and how that works.

Expenses Covered By A Health Savings Account

  • Some premiums, such as COBRA
  • Care in long-term facilities or long-term hospital care
  • Medical transportation costs
  • Medical lodging costs
  • Dental care, such as bridges, braces, and crowns
  • Eye care such as Lasik surgery and eyeglasses
  • Prescription drug costs
  • Psychological and psychiatric treatment services
  • Health plan deductibles, coinsurance, and copays

The first step in embarking on the HSA insurance journey is setting one up. Men and women who are enrolled in qualified health plans have the option of setting up health savings accounts. Usually, this involves talking to your employer who may either have the information you need to set up the HSA insurance at the Human Resources Department, or they can refer you to a financial institution that offers health savings accounts.


Although a health savings account is an expense just like any other expense, there are benefits to having HSA insurance. For many people, the knowledge that they have money set aside for medical expenses that are not subject to federal income tax is a major advantage, but the true benefits of health savings accounts extend far beyond this peace of mind.


Some benefits of HSA insurance include the following:


  • Health savings accounts earn interest: although generally, interest earned on savings accounts is subject to income taxes, interest earned from qualified health savings accounts is not
  • Health savings account deposits are not taxed: contributions you make to your HSA insurance are not taxed
  • Health savings account withdrawals are not taxed: as long as a medical expense is eligible, purchases made with money from an HSA account are not taxed
  • Health savings account balances can be carried over: unlike flexible spending accounts, the balances from HSA insurance can be carried over from one year to the next

HSA insurance funds can be invested or used toward retirement: depending on your account you may be able to invest health saving account funds, and also withdraw them for any reason once you reach 65.

The History


In the last 10 years, the number of health saving accounts has grown from about 4 million to over 20 million, due in part to the benefits mentioned above, but also because these plans seem to fill a historical need that arose as a result of some peculiarities of the American healthcare system. Let’s face it, the healthcare system in the United States has a reputation for being expensive, which usually means that costs men and women are charged for medical needs tend to be higher than in other countries, whether they are doctor’s visits, hospital stays, medications, rehab expenses, or transportation.

Because healthcare expenses seemed to be higher in the United States compared to other countries, analysts sought to identify the causes. The causes are many and are not likely to be completely addressed by a strategy as straightforward as a medical savings account. High healthcare costs have to do with the wages of healthcare workers, expenses of hospitals and medical treatment facilities, medical expenses that go unpaid driving the costs charged by the hospitals up, and many other reasons.


As mentioned previously, analysts found that what they called over-insurance also seemed to be driving costs up, so they recommended the adoption of medical savings account to defray some of these costs, essentially putting men and women in the driver’s seat when it came to paying for their healthcare. Primarily designed for self-employed persons, these medical savings accounts were a way of setting money aside that was not taxed at the federal level, money that could be used for medical expenses.


In 2003, the Bush Administrated implemented the Medicare Prescription Drug, Improvement, and Modernization Act, which included the creation of the health savings account program or HSA insurance. The law became effective at the beginning of 2004. Over the years, the number of individuals with HSA insurance has grown significantly. In 2007, there were about 4.5 million people in the United States with health savings accounts, of which about 75% had employer-sponsored programs while the rest had set up plans with financial institutions.


HSA insurance has become big business in the United States. As of 2018, it is estimated that over $50 billion is held in more than 20 million health savings accounts. Health savings accounts are more common in some states than in others. The states with the most health savings accounts as part of qualified high deductible health plans include:

  • California
  • Florida
  • Illinois
  • Ohio
  • Texas

With over 1 million health savings accounts, California is at the forefront of this burgeoning aspect of the healthcare industry, one designed to meet the healthcare needs of men, women, and families.

Regulations & Policies

Like many aspects of healthcare regulated by the United States Government, health savings accounts are subject to their fair share of regulation. This ensures that both the individual and the grantor of the policy are adhering to the law, providing some protection to the individual placing their hard-earned money into a health savings account.


Some major requirements that must be met to open a health savings account include:

  • Must hold a qualified high deductible health plan on the first day of the month
  • Must not be enrolled in Medicare
  • Must not be claimed as a dependent on someone else’s income tax return for the prior year
  • Must have no other health coverage other than what is allowed by the plan

Conclusion


The labyrinthine world of American healthcare expenses, unfortunately, is not likely to be any less labyrinthine in the near future, but there are ways that Americans can take charge of their health costs and their money. HSA insurance permits men and women to purchase the plan that is right for them, a plan that does not over-insure them, while also making sure that they are ready should any unforeseen occurrence arise in their future.

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