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Posted on DEC 5, 2016

Managing higher health insurance deductibles with an HSA

Do you know the amount of your deductible for your health insurance plan? Whether your health insurance is provided through an employer or purchased on your own, high‐deductible health plans (HDHPs) are becoming increasingly common. These plans can reduce healthcare costs through lower premiums, but they also require you to pay a greater share of health care expenses when you need care.

Health Saving Accounts (HSA)

One benefit of a high deductible health plan is the option to open a Health Savings Account (HSA), which works in tandem with HDHPs. Employers like HSAs because they can lower healthcare costs while maintaining quality health benefits. Consumers like HSAs because they can invest and grow their own money tax‐free and then control how that money is spent.

If you have a qualified HDHP and you're younger than age 65, you are eligible to contribute to an HSA. An HSA works similar to a checking account, except the money you deposit to your HSA grows tax‐free over time.

Contributions to an HSA and the account's earnings can be used tax‐free to pay premiums, co‐pays, deductibles and other expenses of the HDHP. Money can be deposited in your account via payroll deduction, a rollover from another HSA account or through a deposit at your local branch. Similar to a 401(k), there are annual limits to the amount you can contribute each year.

Managing Your Deductible

The IRS defines high‐deductible plans as those with deductibles of $1,300 or higher for individual coverage or $2,600 or higher for family coverage in 2016. To control the costs you pay, it’s important to be proactive about your health care. Try these tips:

  1. Know your deductible amount. If you have questions, check your plan materials or call your health insurance company. Find out how to track your deductible amounts online so you know how much you've paid toward the deductible, and how much is left to pay.
  2. Save money for health care. It's a good idea to save money to cover your deductible in preparation for unexpected health expenses that could arise. Save money in a health savings account (HSA). With an HSA, any unused funds are automatically rolled over from year to year, allowing you to use the money now or let it grow for future health expenses. Go to Johnson Bank Health Savings Account to learn more about the benefits and contribution limits of an HSA account.
  3. Choose the right place for care. If it's not an emergency, save time and money by making an appointment with a doctor or walking into a retail clinic. You'll typically pay a lot less for an office visit compared to an urgent care visit or trip to the ER.
  4. Compare costs. Do your research if you're planning to have a procedure—ask what to expect and how much it will cost. Make your choice based on cost and quality.

To learn more about health care choices and how an HSA can help you manage health care costs, contact a Johnson Bank or Johnson Insurance advisor.