Whether you are a young single guy, a family of four, or you manage the employee benefits for your organization, now might be the time to consider how an HDHP medical insurance plan, together with an HSA (or health savings account) can help reduce monthly premium and medical expenses.

The savings in medical insurance premiums along with the tax advantages of being able to use pre-tax contributions to HSA’s for qualified medical expenses may justify taking on the risks of higher deductibles and out-of-pocket expense limits that an HDHP medical insurance plan requires.

If you are an employer that has been able to keep your pre-ACA health insurance plan through the Transitional Assistance rulings, you may truly find that transitioning to an HDHP is even more attractive today than ever before.

An HDHP medical insurance plan is a high deductible health insurance plan designed to meet certain IRS requirements, that result in the ability of plan members to have their pre-tax dollars set aside to spend on qualified medical expenses.

Click here for more details on Qualifed Medical Expenses.

HDHP medical insurance plans must have:

Individual Coverage 2015 2016
Minimum Deductible $1,300 $1,300
Maximum out-of-pocket Expense Limit $6,450 $6,550
Family Coverage 2015 2016
Minimum Deductible $2,600 $2,600
Maximum out-of-pocket Expense Limit $12,900 $13,100


Source: IRS Rev. Proc. 2015-30

An HSA is the bank account that members enrolled in HDHP medical insurance plans can legally contribute pre-tax earnings, to be spent on qualified medical expenses.

HSA Contribution Limits 2015 2016
Individual Coverage $3,350 $3,350
Family Coverage $6,650 $6,750

For those age 55 and up, the IRS allows HSA Catch up Contributions, similar to 401k and IRA catch up contributions.

If you are age 55 or older by the end of year, you can contribute an additional $1,000 to your HSA annually.

If you are married, and both of you are age 55, each of you can contribute additional $1,000 annually.

However, because all HSA’s are individually held (there is no joint HSA even when you have family coverage),  — only the person age 55 or older can contribute the additional $1,000 in his or her own name.

If only one person is age 55 or older, and their spouse contributes $6,750 to their own HSA, the other spouse age 55 or older would need to open a separate account to be able to contribute the additional $1,000 in Catch up Contributions in order to maximize the contribution limit.

If both spouses are age 55 or older, they again must have two separate HSA accounts if they want to contribute the maximum including $2,000 of Catch up Contributions of $8,750. There’s no way to hit the maximum with only one account.

Important note:  Medicare enrollees generally are NOT eligible for HSA’s.

If you would like more information on HSA’s and how they may be of value to your family or your business’ employee benefits package, please contact me via telephone or email today!



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