Health Savings Accounts: Myth Vs. Fact
MYTH: HSAs Do Not Help People With Limited Incomes And Resources.
FACT: HSAs Are Making Insurance More Affordable For All Americans - Especially Those With Limited Incomes And Resources. Surveys have found that 40 percent of HSA plans are bought by families with incomes under $50,000. HSAs provide a critical option for those with trouble affording traditional insurance coverage. To further help low-income Americans, the President proposes expanding HSAs by providing extra financial help. Under the President's proposals, a family of four making $25,000 per year or less will be able to receive a refundable tax credit of $3,000 to help purchase an HSA-qualified policy covering major medical expenses. Families will be able to place up to $1,000 of this money directly into an HSA to pay for routine medical expenses. What the family does not spend can be saved in the account and carried over to the next year, earning interest tax-free.
MYTH: HSAs Do Not Help The Uninsured.
FACT: HSAs Are A More Affordable Choice For Those Previously Uninsured. HSA-qualified insurance plans coupled with HSAs often have lower premiums, which make these accounts an attractive option for those previously uninsured. The latest survey data indicates that more than one-third of those who purchased individual HSA policies were previously uninsured.
HSAs Are Also Enabling Small Businesses To Provide Health Insurance. The latest survey data indicate that one-third of small businesses now offering HSA plans did not previously offer insurance to employees.
MYTH: HSAs Are Just For The Young And Healthy.
FACT: HSAs Are Helping All Americans Regardless Of Age Or Health. Surveys have found that nearly half of HSA enrollees are at least 40 years old. Some Americans with high medical bills can save money with HSAs because the HSA-qualified policy covers larger medical bills and the savings account covers other needs with tax-free dollars.
The President Proposes Allowing Employers To Make Larger Contributions To Chronically Ill Employees' HSAs. Under current law, employers must contribute the same amount to each employee's HSA, preventing them from providing extra help to chronically ill employees or employees with a chronically ill dependent. Permitting employers to make higher contributions to the HSAs of chronically ill employees will help them fund their HSAs and help them pay their out-of-pocket medical expenses tax-free.
MYTH: HSAs Do Not Result In Real-World Savings.
FACT: HSAs Are Lowering Health Care Costs For American Families. Consider the following two real policies offered by the same insurer for a healthy family of four earning $50,000 a year living in Stamford, Connecticut. An HSA-qualified policy has a premium of $5,150, a deductible of $5,500, and co-insurance of 20 percent up to a maximum of $10,000. Meanwhile, a traditional Preferred Provider Organization (PPO) policy has a premium of $9,900, a deductible of $1,000, and 20 percent co-insurance up to a maximum of $4,000. If the family's medical bills totaled $1,000, they would save more than $4,000 by choosing the HSA-qualified policy. Under the President's new proposals expanding HSAs, the savings would jump to $5,500. Even if the family had $10,000 in medical bills (fewer than 20 percent of families face costs this high in a year), under the current law the family would still save almost $1,000 by choosing the HSA-qualified policy rather than the PPO. Under the President's new proposals, they would save $3,300.
MYTH: HSA-Qualified Insurance Policies Do Not Provide Comprehensive Coverage.
FACT: HSA-Qualified Insurance Policies Provide Comprehensive Coverage At Lower Premiums. HSA-qualified policies generally provide the same benefits as traditional health insurance plans but require that a higher deductible be paid up front. Many HSA-qualified insurance plans cover prescription drugs and doctor's office visits. Surveys have found that most plans also have comprehensive OB/GYN coverage and all plans include emergency room visits, hospitalization, and lab/X-ray services. HSA-qualified policies may also provide preventive care without a deductible.
MYTH: HSAs Are Too Complicated.
FACT: The Process Of Signing Up For An HSA Is Straightforward And Information Is Easily Accessible. People with HSA-qualified plans can open their account with banks, credit unions, insurance companies, and other approved companies. Employers may also set up a plan for employees. More information is available from the Treasury Department's website at http://www.treas.gov/offices/public-affairs/hsa/faq.shtml.