Reduce Health Insurance Costs

Charles Goodman Group: Trustworthy Insurance Agent in Chappaqua

If an employer offers a health savings account (HSA) to help offset health insurance deductibles each year, employees can benefit from untaxed deposits and tax-deferred interest on their accounts. HSA plans are similar to retirement savings accounts like Roth IRAs and 401K savings accounts in that money deposited into them is deducted from employee paychecks before taxes are taken out and the interest they collect isn’t taxed. When money is withdrawn from an HSA to pay out-of-pocket healthcare expenses, the withdrawal isn’t taxed either. The one requirement of an HSA is that it’s combined with a high-deductible insurance policy, and a Chappaqua insurance agent can explain the best options regarding healthcare deductibles and health savings accounts. An employee who doesn’t use his healthcare coverage very often can significantly benefit from the lower premiums and tax-deferred savings over the lifetime of the policy. Throughout a career lasting 40 years, an HSA with a 7.5-percent rate of return could potentially save him more than $1 million.

While opting for an HSA isn’t the same as being self-insured, it’s similar in the regard that a portion of the risk of healthcare costs is transferred to the policyholder.

The insurance agent experts at the Charles Goodman Group of Chappaqua can assist you with any questions regarding health insurance or automobile insurance.

The law requires the policies of HSA holders to include a deductible of at least $1,250 for an individual and $2,500 for a family. They can deposit up to $3,250 per year into individual accounts or up to $6,450 per year into family accounts. It’s always wise to deposit at least the amount of the deductible each year, even if it isn’t spent within the year. An HSA is different than a flexible spending account (FSA) in that funds roll over to the next year rather than being lost. An FSA is a similar type of untaxed account used to pay for out-of-pocket healthcare costs, but it must be spent entirely each year and doesn’t roll over to the next period. If an employer offers a choice between an HSA and an FSA, employees are better off choosing the HSA and taking advantage of the tax-deferred retirement savings and low insurance premiums.

It’s not necessary to have an HSA to get lower premiums by raising a policy’s deductible. Any type of savings or investment account will work as a funding source for out-of-pocket expenses, such as co-pay, co-insurance, deductible and prescription medication costs. Taking on more of the financial risk of healthcare is a reasonable decision for policyholders with alternative means to pay for medical costs and infrequent need for medical treatment.