If you are like me you like to choose how you spend your health care dollars. Also, if you are like me, you are vexed by the idea of being forced into buying an expensive health insurance policy that doesn’t cover the services you want and need and the pending tax penalty (which is higher than I previously realized) that will ensue if you do not comply.
The Affordable Care Act has certainly changed the health care landscape but HSA plans well predate the law. They have, unfortunately, become significantly more expensive (but so have all the non HSA compatible health insurance plans that I have seen this year). High deductible plans, do however, remain a viable option. Obama has been somewhat hostile to “catastrophic” plans, often referring to them as “substandard”. They are, in fact, only substandard if you do not have enough money to meet your deductible in the event of a major illness or injury. Used responsibly, they can be great tools to take control over your health care and get tax breaks instead of tax penalties for doing it.
The idea is that you get one of the high deductible plans available in the marketplace. The premium you pay is tax deductible. You then funnel as much money as you can afford into a special savings account called an HSA . The amount you can contribute is limited in 2015 to the following per year:
$3350 for individuals
$6650 for families
These contributions are also tax deductible. Ideally, over time you contribute enough into the savings account to both cover your deductible and pay for the health care services you choose. It may, of course, may take many years to build up enough money to pay a high deductible out of the HSA account. But as you slowly build up the account, you can spend any amount you have on the health care services you use, and would be paying out of pocket for anyway. There are no minimum balances that I know of. If something catastrophic does happen you can pay your deductible from any source and eventually reimburse yourself from your HSA account as you accumulate the funds.
Health care costs that are eligible for payment from an HSA are almost everything; acupuncture, herbs prescribed by your practitioner, vision services and products and all dental expenses, massage, chiropractic care and other medical expenses. The money in the account carries over from year to year and can be built up gradually.
It is possible, that if you signed up for a bronze or silver plan this year, you have an HSA compatible plan and you don’t even realize it. The IRS guidelines are simple and many banks offer HSA accounts with little to no monthly fees. They are even interest bearing. To learn more about HSA’s do a little research online or go to the IRS website directly. I think they are an excellent alternative for folks that want to choose where their health care dollars are going. This is something to consider as you navigate the changing landscape of health care reform. I have really appreciated mine over the years.