When you hear the words “We would like to have you as a member of our team.”, it is beyond exciting, you landed the job. However, reality sets in when Human Resources provides you with a benefits package. You are inundated with information and jargon you may have never heard of. To make this process less daunting, for this month’s blog we decided to focus on a potential piece of the package: medical coverage and specifically the savings accounts that may be offered relating to that medical package.
There are multiple health savings accounts that are available, such as Health Savings Accounts (HSA), Flexible Savings Accounts (FSA), and Health Reimbursement Arrangements (HRA). The next logical question and to quote Austin Powers: “Whoop-de-doo! What does it all mean, Basil?”. All of these accounts have different characteristics and rules, thus to save time we are going to highlight one account that was recently created and is growing in popularity - the HSA. To explain the HSA, we have broken the account into the following sections: History & General Characteristics, Eligibility, Contribution Rules, Distribution Rules, and Advantages.
To further clarify, your health plan must exceed the “Minimum annual deductible” and fall short of the “Maximum annual deductible” shown. For example, if you carry family coverage and your annual deductible is $3,000 and your annual deductible and other out-of-pocket expenses are less than $13,100, your plan would be considered a HDHP and you would be eligible to establish an HSA.