Getting started with Health Savings Accounts

by Tony Novak, MBA, MT, OnlineAdviser at Freedom Benefits updated 11/21/11

Health Savings Accounts can save thousands of dollars in insurance and taxes each year for those who enroll in these innovative new health plans, but how do you find a plan that offers these benefits? The first step is to find a qualifying health insurance plan. This might not be as easy as you think.

If you ask your health insurance company representative today whether they offer HSA-qualified insurance plans, the response will fall into one of three categories:

“HSA-Qualified” – there are relatively few health insurance companies that offer HSA-qualified insurance plans and simply labeled then as "HSA-qualified" in their advertising. These few companies tend to be well versed in this area of the tax law and related administrative issues. We recommend UnitedHealth and Celtic Insurance as the top choices for qualify and value nationally. Other plans may be available on a local basis.

“We have high deductible health insurance but we don’t know about HSAs” – this is the response from most health insurance companies right now. We presume that the insurance company makes no representation to the Treasury or the policyholder with regard to this issue. Individual customers who are enrolling in these plans typically take the position that the plan meets the requirements of the tax code and therefore conclude that they are qualified for a HSA deduction. Some tax advisers (including the author) tend to take the more conservative position that if a health insurance company does not say that it’s health plans are HSA-qualified, then they are not.

“Not-qualified” – these are the companies that are aware of the HSA program qualification issues and may be investigating the possibility of filing their products in specific states now. This group contains the most innovative health insurance companies and, in my opinion, represents the best source of hope for the future of the Health Savings Account program. So a “no” is not necessarily a bad thing, but rather a reason to be patient.

Tony Novak is a member of the Pennsylvania Institute of Certified Public Accountants, the New Jersey Society of Certified Public Accountants and an accredited member of the Better Business Bureau.

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