Irving Frequently Asked Questions About A
Health Savings Account
What is an HSA?
Our Most Common Texas Health Savings Account Frequently Asked Questions
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What is an HSA? HSA stands for Health Savings Account which is a tax deferred savings account very close to a traditional IRA account, but earmarked only for medical expenses.
How does it work? The savings account portion is linked to a high deductible Texas health insurance policy. This gives you full health insurance protection at a low cost. All monies deposited into an HSA are 100 percent tax deductible. The Texas health insurance carrier you choose for the policy pays the covered expenses in excess of your deductible and you'll pay the smaller bills with the pretax money you've set aside in the HSA account. You can use your pretaxnmonies to pay for some medical expenses which are not covered under the medical insurance policy. Examples include, dental, vision and some alternative medicines and procedures. Whatever you don't spend each year stays in the account and rolls over to next year. You can also keep the monies in the account and accumulate funds to supplement retirement.
Are there requirements to open an HSA? In order to open an HSA account, you must first be covered and effective under a qualified, HSA eligible health insurance policy. The account must be opened and maintained by an HSA custodian as defined by the IRS. Most any major bank in the U.S. will do, but contact your bank for details.
Can I choose my own providers? With an HSA policy, you can use any doctor/hospital you choose as long as they are in the PPO network. If you go out of network, you won't receive the PPO negotiated rates. You find that if you stay "in-network", you'll receive significant savings compared to going out of network. The PPO networks offer a massive choice of physicians, hospitals, etc at significantly discounted rates.
What happens if I reach my deductible? If your medical bills for the calendar year exceed the deductible of your HSA insurance policy, the policy will pay the balance of the expenses at the co-insurance rate which is normally 100% on most of the HSAs we offer. Generally, you are fully covered for medical expenses over the amount of your Texas HSA policy deductible while using the funds set aside in your account to cover expenses prior to meeting your deductible.
What happens to the money in my HSA account that I don't spend on medical bills? The money you've set aside in your HSA account is your to keep. The less money you spend on medical bills, the more money will remain in your account. It will earn bank interest or investment returns while in the account and depending on the Health Savings Account administrator you choose, you can invest it in any securities you prefer, including mutual funds, stocks and bonds.
Can I contribute to my HSA every year?Remember, an HSA is just like an IRA and you're allowed to contribute to the account each year you are eligible. You can fully deduct your contributions 100 percent every year.
How much are the co-pays for office visits and prescriptions? You self insure the smaller bills with pretax dollars from your HSA account. An HSA policy typically does not have doctor co pays like a traditional plan. Some Texas Health Savings Account policies will have prescription co pays after you've satisfied your deductible and some have co pays for preventive care only.
Do I pay taxes on the monies in the HSA account not used for medical expenses? All dollars you choose to deposit in the account are completely tax free while they remain in the account as well as any earnings you generate on those dollars while in the account. At age 65, you may keep the balance in your HSA account to use for future medical bills. You'll never pay taxes on the interest or principal and you can also start withdrawing the funds to supplement retirement. Tax is only ever paid on principal or interest from the account if the money is withdrawn for a nonmedical expense. Also, there is a 10% penalty for withdrawing funds for nonmedical expenses before age 65& (unless an you qualify for an exception like a disability). When you reach 65, you'll only be liable for taxes on the monies you withdraw that are not used for medical bill. You can withdraw monies to pay for medical bills at any time after age 65 and never pay taxes on those funds.
What if I pass away before using the funds in my HSA? An HSA is an inheritable account just like an Individual Retirement Account (IRA).
With an HSA policy, you can use any doctor/hospital you choose as long as they are in the PPO network. If you go out of network, you won't receive the PPO negotiated rates. You find that if you stay in-network, you'll receive significant savings compared to going out of network. The PPO networks offer a massive choice of physicians, hospitals, etc at significantly discounted rates.
What happens if I reachmy deductible? If your medical bills for the calendar year exceed the deductible of your HSA insurance policy, the policy will pay the balance of the expenses at the co-insurance rate which is normally 100% on most of the HSAs we offer. Generally, you are fully covered for medical expenses over the amount of your Texas HSA policy deductible while using the funds set aside in your account to cover expenses prior to meeting your deductible.
What happens to the money in my HSA account that I don't spend on medical bills? The money you've set aside in your HSA account is your to keep. The less money you spend on medical bills, the more money will remain in your account. It will earn bank interest or investment returns while in the account and depending on the Health Savings Account administrator you choose, you can invest it in any securities you prefer, including mutual funds, stocks and bonds.
Can I contribute to my HSA every year? Remember, an HSA is just like an IRA and you're allowed to contribute to the account each year you are eligible. You can fully deduct your contributions 100 percent every year.
How much are the co-pays for office visits and prescriptions? You self insure the smaller bills with pretax dollars from your HSA account. An HSA policy typically does not have doctor co pays like a traditional plan. Some Texas Health Savings Account policies will have prescription co pays after you've satisfied your deductible and some have co pays for preventive care only.
Do I pay taxes on the monies in the HSA account not used for medical expenses? All dollars you choose to deposit in the account are completely tax free while they remain in the account as well as any earnings you generate on those dollars while in the account. At age 65, you may keep the balance in your HSA account to use for future medical bills. You'll never pay taxes on the interest or principal and you can also start withdrawing the funds to supplement retirement. Tax is only ever paid on principal or interest from the account if the money is withdrawn for a nonmedical expense. Also, there is a 10% penalty for withdrawing funds for nonmedical expenses before age 65 (unless an you qualify for an exception like a disability). When you reach 65, you'll only be liable for taxes on the monies you withdraw that are not used for medical bill. You can withdraw & monies to pay for medical bills at any time after age 65 and never pay taxes on those funds.
What if I pass away before using the funds in my HSA? An HSA is an inheritable account just like an Individual Retirement Account (IRA).