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hsa health plan
hsa ppo

HSA Health Plan Summary

Additional information is in the U.S. Treasury and I.R.S. file links at the bottom of Health Savings Account Rules

Whether the plan you buy uses a PPO claims network or is an HMO or EPO, or whatever, does not affect whether it qualifies you for an HSA. Instead, the qualification is dependent on factors like the amount of deductible, total out-of-pocket, and whether there are any copayment features.

In brief, qualifying High Deductible Health Plans from insurance companies meet requirements under the Internal Revenue Code which allow the insured to get a tax deduction for whatever amount is deposited into a savings account at a bank or other financial institution. Medical, dental, chiropractice, vision, and related expenses can be paid for untaxed out of the account.

Some insurance companies offer to handle the savings account as well as the insurance. Most do not. Some may introduce you to a financial institution that has HSA accounts. If you like that convenience, then take advantage of it. Otherwise, it's best to decline the offer and shop around by yourself.

HSA-qualified health insurance may pay for preventive care before the deductible is met, may have low or no deductible for treatment of accidental injury (usually by an optional accident rider), and but can not pay for other medical treatment, including office visits and prescriptions until after you have paid your deductible, e.g., Copays are not allowed for office visits or prescriptions.

The coverage from the health insurer has nothing to do with the health savings account from the bank except that it is necessary to buy that type of health insurance plan to be allowed to open such a bank account and take the tax deduction.

It is not necessary to open a health savings account in order to have one of these qualifying plans. This type of plan design may be ideal if you just want a high deductible without copays in order to get a lower premium even if you cannot take advantage of the tax deduction.

The list of expenses that can be paid for out of the savings account is broader than the covered expenses in the plan itself, e.g., dentistry and vision expenses can be paid for out of the savings account even though the plan may not cover such items.

Depending on medical expenses, the account balance will build up with each annual contribution, tax free. At age 65 you can use the accumulated savings as you wish (after taxes), so it can act as a retirement savings account as well.

Individual HSA

Plans not qualified for an HSA

Non-qualified means that the plan design does not qualify the insured to open a Health Savings Account and get the tax deduction. There is nothing wrong with such plans. They just don't fit the criteria for getting a special tax deduction. There is nothing much new here in plan design, just a law allowing a tax deduction if you have a particular type of plan design.

The plan design that does qualify, and the plan design that does not, both existed before the law. The law has designated one plan design to qualify, and excluded the other from qualification. However, some individual insurers may now have introduced new plan designs that they did not have before so as to be able to offer qualifying plans.

Plans that do not qualify may have copays for physician office visits and prescriptions, low or no deductible for sickness, or too high a deductible, or various bells and whistles that are not allowed in HSA qualified coverage.

The rationale for the HSA tax deduction eligibility is to encourage consumers and employers to buy lower cost health insurance plans. A lower cost can only come from the insured having more out-of-pocket expense. That is why there is a lower limit on what the deductible can be and copays are not allowed. Since plans like these were available before the change in the tax code allowing the tax deduction, the question arises as to why such a deduction was introduced. Do buyers really need encouragement to buy lower cost plans?

Both categories of health insurance, HSA-qualifying and non-qualifying, are included in the Online Quote Systems.

Further information:  HSA Rules  HSA Setup  HSA or no HSA?  HSA Banks  HSA Simplified

HSA account

HSA-qualified Quotes (select 'HSA' under 'Plan Type' in the quote results)