If you enroll in a high deductible health plan, you may be given the chance to set up a health savings account, or HSA. With this consumer directed plan, you can use the money in an HSA to pay for your out-of-pocket medical expenses.
Let take a look at how it works.
To open a health savings account, you must first enroll in a high deductible health plan that follows certain Internal Revenue Service rules. Plans that meet these rules are called qualified high deductible health plans.
All of the high deductible plans designed for use with health savings accounts offered by CareFirst meet these IRS standards.
The IRS rules for a qualified consumer directed health plan specify the minimum deductible amount that you’ll pay. The IRS also specifies the maximum out-of-pocket amount that you’ll pay. And the IRS requires a combined deductible for medical and drug coverage.
The money in a health savings account is yours. There is no “use-it-or-lose-it” rule. The money you haven’t spent automatically rolls over from year to year. When you change jobs, retire, or move, money in your HSA belongs to you.
You can use your health savings account money on a wide range of health care costs. Let’s say, for example, that you don’t have dental or vision insurance. You can use your money for braces, or to cover the cost of your annual eye exam.
To learn more about qualified expenses, go to the Internal Revenue Service website and search for section two 13 D expenses.
Intro to CDH
Health Insurance Basics
High Deductible Health Plans
HSA Tax Benefits
How HSAs Work
Health Reimbursement Arrangements