You might have already heard the term “health savings account” from friends or family who have one; or perhaps more recently in the news during talks about government health care reform.
What is a Health Savings Account?
A Health Savings Accounts (or HSA) is simply a savings account specifically meant to be used for health-related bills. Often, patients choose to use their HSA for medical bills not covered by their insurance carrier, such as contact lenses or glasses, naturopathic medicine, chiropractic visits, and so on.
The theory behind HSAs is that they allow patients to take more financial control over their health care by being accountable for it. That way, providers are also held more accountable for being transparent with pricing.
What’s Changed With Health Savings Accounts?
Health Savings Accounts have been available for Americans since 2003. However, they are becoming increasingly more popular for greater savings by pairing them with health insurance plans with higher deductibles.
What’s more is the current administration aims to increase the number of people signing up for these accounts with the new health care bill. By nearly doubling the limit which can be contributed to HSAs each year by both individuals (from $3,400 to $6,550) and families (from $6,750 to $13,100), lawmakers hope to increase the popularity of Health Savings Accounts.
Not only will the HSA contribution limit increase, the new Health Care Act also:
Allows HSA users to pay for over-the-counter medications using their Health Savings Account (which was previously restricted under the ACA).
Allows approved medical expenses from pre-HSA coverage to be reimbursed from an account created within 60 days.
Allows spouses to make “catch-up” contributions to a single HSA in 2018.
- Decreases the tax penalty of HSA use for unqualified medical expenses from 20% to 10%.
In addition to the changing laws, more and more companies are offering their employees an HSA as part of their health coverage. According to Algeus, 80% of companies with over 5,000 employees, 61% of medium-sized companies, and 25% of small companies are offering plans eligible for Health Savings Accounts.
Moving forward, Health Savings Accounts are expected to become even more popular, contributing to more accountability and pricing awareness in the health care sector.
Have questions about Health Savings Accounts? We can help. Contact get-benefits today to learn more.