Who Is Eligible To Open A Health Savings Account?

Who is eligible to open up a health savings account?
First, let’s look at what health savings accounts are. A health savings account is a medical savings account in which contributions are made by yourself or your employer and are available for qualified medical expenses under IRS regulation. So now that we know what a health savings account is, let’s move on and discuss who is eligible for one.

  • Anyone who has a high insurance deductible insurance plan.
  • Anyone who is not covered by another insurance plan.
  • A spouse of someone is eligible to use the funds within the health savings account as so long as that spouse is not covered under another insurance plan.
  • Dependents that you claim on your income tax return are eligible to utilize the funds for their qualified medical expenses.
  • Anyone who has an existing health savings account and changes jobs is eligible to port that account to roll over into another health savings account.

What makes someone ineligible?
Now that we have looked at who is eligible, let’s take a look at who may not be eligible for a health savings account.

  • Anyone who is enrolled in Medicare is ineligible.
  • A person who is claimed as a dependent on someone else’s tax return is ineligible.
  • Anyone who is not enrolled in a high deductible health insurance plan is ineligible.
  • Anyone who is enrolled in other insurance is ineligible.

Other Considerations
Additional insurance coverage like dental, vision, disability, accident and long-term care are not considered “other insurance” under the IRS guidelines. So, what does the IRS consider “other insurance?”

Things to Know
What if a person is enrolled in a high deductible insurance plan and also has another type of plan like a health reimbursement account or a flexible spending account?  That scenario makes an individual ineligible to enroll.

When considering if you are eligible to enroll, make sure you cannot be claimed as a dependent on someone else’s tax return, that the only other insurances you have besides your high deductible health insurance plan are ones that the IRS deems acceptable. If you are unsure, check with your tax advisor. Make sure that you are not enrolled in other accounts like a flexible spending account or health reimbursement account. Other than those considerations, being eligible for a health savings account is fairly straight forward.

What Is A Flexible Savings Account?

Want to have a health plan but no enough funds to avail of a health plan? You already have a health plan but cannot avail of their benefits during outpatient visits?

There is one alternative to getting a health plan and not puncture your pockets. Have you ever heard about flexible savings account?

A flexible savings account is a special kind of account wherein deposited money is used to pay out-of-the-pocket health expenses. By this, it means that you can use the money to pay your check-ups and other outpatient services, similar to how inpatient health plans work.

Otherwise known as flexible spending account, there are several advantages that comes along with using it.

  • Reduces the taxes that you pay.

Just like how a health savings account works, opening a flexible savings account will allow the policy holder to save more on taxes. That’s right. Whatever money that you put in the account is automatically deducted from your taxable income for that year.

With that in mind, you will be able to save an amount that is equivalent to what you have paid for in taxes for saving money.

  • Money deposited can be used for the outpatient health services.

The good thing about opening this kind of account is that you can use the money for outpatient services that you normally pay for using your own money. Think of it as opening a savings account for health purposes.

There are a lot of uses for this kind of account. You can use the money for:

  • Dental services
  • Prescription and over-the-counter medications
  • Insulin (reimbursements can be done even without a prescription)
  • Money can be used to purchase medical equipment.

Aside from purchasing medications, the money can also be used to buy medical equipment. This is good news as usually these kinds of equipment are quite expensive to begin with.

Medical supplies and diagnostic kits can also be purchased with this. Examples of stuff that you can buy include bandages, glucose test kits, etc.

  • Your family can also benefit as well

Just like the HSA, funds deposited in a flexible spending account can be utilized by the dependents of the policy holder. Despite the limitation with the amount one can put up, your spouse can also add to the amount that is deposited in the FSA.

Health is always wealth. Better take charge of your health while you still can. Give yourself the chance to be free from financial difficulties when health problems arise.

How Can You Find Cheap, Private Health Insurance?

To find a cheap private health insurance is almost impossible in the advent of prices getting high nowadays, however, there are cheap private health insurances that are available in the country today, it is just a matter of thorough research and smarter ways to do in order to find a cheap health insurance.

Understand the choices of buying health insurances individually
It is possible to not buy individual health insurance, depending on the state that you live and how much is your income, you may be able to actually qualify for Medicaid. It is always better to provide time for research and contact the your nearest Medicaid office. Another option also is to log on to Healthcare.org to figure out which type of insurance you are eligible for. Having children also can be an advantage to you, and there are a lot of options to choose from. One option would be the CHIP or Children’s Health Insurance Program. To see if your kids qualify for CHIP go to the nearest Medicaid office or log on to the Medicaid CHIP website and the staff are more than happy to help you out.

Know your needs and how much you can afford
One of the most important steps to find for a cheap health insurance is to figure out your need for coverage and how much you can afford. If you buy excessive coverage more than you need you will end up spending more than what you need. Also, having knowledge of how much you can afford, you won’t be able to spend anything that you do not have.

The Affordable Care Act covers these benefits:

  • Outpatient Services
  • Emergency Room Services
  • Inpatient care that is admitted to the hospital
  • Care before and after the baby is born
  • Substance abuse disorders and other mental health illnesses
  • Prescription drugs
  • Occupational Health
  • Laboratory Tests
  • Preventive Services
  • Dental Care for kids

With more than almost everything covered some health insurances can customize your needs depending on your future and current usage of the health insurance.

Consult the Healthcare.gov website
The Healthcare.gov website is a very accessible online program where all your questions will be addressed and they can help you out how to choose the better type of insurance that is best for you. Also, they have contact centers that are able to talk to you one on one if you are not comfortable going to the website.

The Limitations On An HSA Plan

They are typically used to supplement medical costs and they can cover much more than just medications and doctor visits. There are many benefits to opening an HSA, but how much are we allowed to contribute to them? The 2018 HSA contribution limits maximum is $3,50 for an individual and $7,000 for a family.

Savers of age 55 and over can make an optional catch-up contribution of up to $1,000 each year.

The HSA Low-Downs
A Health Savings Account is a savings account you use for healthcare expenses a bit like a medical IRA. It works hand-in-hand with healthcare insurance to help you meet your out-of-pocket medical expenses such as deductibles and medical costs not covered by your health plan. And you might be surprised by what an HSA can cover– from sunscreen to gym memberships. One major advantage of an HSA is that it is treated favorably for tax.

What’s the Drawback?
There’s really only one drawback to an HSA. But one of the HSA limitations is it must be paired with a high-deductible health plan or HDHP. An HDHP is a plan with lower premiums but a relatively high annual deductible, the amount you pay out of your own pocket before your insurance kicks in, as determined by your insurance provider. They are intended to cover serious illness or injury. To open and contribute to an HSA, you must be covered under a HDHP on the first day of the month, you cannot be covered by a non-HDHP plan or enrolled in Medicare and no one can claim you as a dependent on a tax return.

In 2018, the IRS defines an HDHP as a plan with a minimum annual deductible of $1,350 for individuals. For families, the minimum deductible is $2,700. The maximum permissible deductible, along with other out-of-pocket expenses, is $7,000 for individuals and $13,250 for family coverage.

Policies with deductibles outside these ranges do not qualify as an HDHP, so if you belong to one of these, you are not eligible to open an HSA.

You also won’t be eligible to open an HSA if you’re enrolled in Medicare or any other non-compatible plan, or if someone can claim you as a dependent on their tax return.

In a nutshell, HSAs provide a tax-advantaged way of saving for current and future health care costs, and remember that the 2018 HSA contribution limits have risen from just the year before.

FUN FACT!
Parents, spouses and even friends can contribute but be aware of the HSA limitations; so, now’s your chance to cash in on having a friend with benefits!