If you want your new health insurance to start on January 1st then you must enroll before December 15th. You can still enroll until January 15th, but your policy won’t start until February. We know you’ve been hearing OEP over and over the last few months, but that’s because we can’t stress enough how important it is. Not only is this the only time you can enroll in a new plan. This is the only time you can review your current plan and make sure you have all of the coverage you need within your budget. You’re in control of your health and there’s plenty of plan and carrier options out there ready to help you stay in control.
Guaranteed Coverages
The Affordable Care Act (ACA) brought a lot of change to the health insurance industry. All of which center around making sure everyone has access to affordable coverage. The ACA introduced the “10 essential benefits”. Which are 10 health care benefits that every marketplace plan must cover regardless of tier, plan type, cost, or provider.
Ambulatory patient services
Emergency services
Hospitalization
Laboratory services
Mental health and substance use services
Pregnancy, maternity, and newborn care
Prescription medications
Preventative and wellness services and chronic disease management
Pediatric services
Rehabilitative and habilitative services
Not only are health plans required to cover these benefits. Insurers are also prohibited from denying or charging more for a plan based on pre-existing conditions. So thanks to the ACA you are guaranteed to get a plan that covers all of your basic needs without having to pay an arm and a leg.
Your Options
You’ve got nothing but options during the OEP, from plans to plan tiers to possible subsidies and then some. Let’s go over the basics and give you a good starting point in your search.
The first thing you have to do is choose a plan type. While every Marketplace plan is legally required to cover the “10 essential benefits”. Plans can offer extra benefits and they can all be structured differently. So, this step is a big one because it sets the foundation for the coverage you have.
HMOs offer you the option of choosing from a local network of participating physicians, hospitals, and other healthcare providers and facilities. As part of these health insurance policies, you must choose a primary care physician (PCP) from this network. Your primary care physician (PCP) will get to know you and help you organize all of your medical care. They are also responsible for referring you to any specialists. Without this recommendation, your HMO would not cover a specialist visit. A HMO plan’s out-of-pocket costs are frequently lower than those of other types of health plans as long as you stay in-network. In general, an HMO may make sense if you prioritize lower expenses and don’t mind using a PCP to oversee your treatment.
PPOs offer a vast network of participating providers, so you can choose from a wide range of hospitals, clinics, and healthcare facilities. Unlike HMOs, PPOs provide some coverage for providers outside of their network, but not as much as they would for an in-network provider. Another significant distinction between PPOs and HMOs is that you aren’t required to choose a PCP and you can see a specialist without a referral. A PPO is often a smart option if you want more control over your options and are willing to pay extra for it. It would be especially useful if you travel frequently because you would not have to see a primary care physician.
Exclusive Provider Organization (EPO)
EPOs also allow you to choose from a network of participating providers. Except in cases of emergency, most EPO plans do not cover care outside of their network. As a result, if you see a provider or facility that is not part of the plan’s local network, you will most likely be paying for the whole cost of services. As for PCPs, EPOs can go either way, some require you to choose a PCP and others don’t, it just depends on the insurance company you choose. In either case, as long as the specialist is in the plan’s network, you will not require a referral from your primary care physician. If you need cheaper monthly rates and are ready to pay a larger deductible when you need medical treatment, an EPO plan may be for you.
Point of Service (POS)
POS plans combine the benefits of PPOs and HMOs. A POS’s provider network, like an HMO, is often smaller than a PPO plan, and in-network care expenses are typically lower, as with a PPO. In POS plans, you must select a primary care provider (PCP) from a network of physicians and other primary care specialists. If you need to see a specialist, you have to get a referral from your PCP.
However, just like with PPO, you have the option of seeing in-network or out-of-network experts. However, if you visit an out-of-network provider, your part of the costs will be higher, and you will be responsible for submitting any claims. POS insurance plans are a terrific option for many people, especially if you’re looking to save money and don’t need out-of-network healthcare services. If you are prepared to coordinate your care through a primary care physician, a POS plan may be perfect for you.
Health Expense Accounts
There are also separate savings plans you can buy to help you save up money specifically for medical costs.
An HRA, or health reimbursement arrangement, is a form of health expense account provided and owned by your employer. Because they own the HRA, your employer is the only one who can contribute to it. They can also determine if you can roll over unused cash to the next year. The money in it is used to pay for eligible expenses including medical, pharmaceutical, dental, and vision care, as defined by the employer.
A health savings account (HSA) is a bank account that you can use to pay for qualifying health care bills or to save for retirement. An HSA is available when combined with a qualified high-deductible health plan (HDHP), which has lower premiums/plan contributions and greater deductibles than a regular health plan. If you have an employer-sponsored health plan, the account is opened through the HSA provider chosen by your company. You, your employer, and others can contribute to your HSA up to a yearly limit determined by the IRS.
Flexible Spending Account (FSA)
An FSA is an employer-sponsored savings account that helps manage out-of-pocket healthcare bills. FSAs are tax-advantaged accounts, which means you can contribute to them before taxes and spend the money tax-free. FSAs allow account holders to save for eligible healthcare expenses by deducting pre-tax money directly from their paychecks. FSA funds can be used to cover deductibles, co-pays, and medical visits for you, your spouse, and any qualified dependents. Employers may contribute to their employees’ FSAs, but they are not obligated to do so.
Health Insurance Subsidies
Marketplace plans have two types of subsidy. The first type, known as the premium tax credit, lowers your monthly insurance costs. The cost sharing reduction (CSR) is a sort of financial aid that reduces your deductibles and other out-of-pocket payments when you visit the doctor or stay in the hospital. To get either sort of financial aid, you must enroll in a health insurance Marketplace plan.
Premium Tax Credit
A premium tax credit, sometimes known as a premium subsidy, is a tax credit that reduces or eliminates the amount of money that you would otherwise have to pay for getting individual or family health insurance. Unlike other tax credits, the premium tax credit can (and typically is) given upfront and all year. Each month, the IRS gives money to your health insurer, so you don’t have to pay as much yourself. Your tax return is then compared with the premium tax credit the following spring. You can also choose to pay full price for a health plan in your state’s exchange and then get the full premium tax credit on your tax return. Few people do this, however, because the cost of coverage without the advance premium tax credit is often out of reach for those who do qualify for the premium tax credit.
You must apply for coverage through the Marketplace and give information about your age, residence, household size, citizenship status, and expected income for the following year in order to receive the premium tax credit. Following the submission of the application, you will receive a decision indicating the amount of premium tax credit you qualify for. You can then choose to have the tax credit paid in advance, claim it later when filing your tax return, or a combination of the two.
Who’s Eligible?
To be eligible for the premium tax credit beginning in 2024, you must meet the following requirements:
Have a household income of at least the Federal Poverty Level (FPL), which is $14,580 in 2024.
Lack of affordable coverage through a workplace (including a family member’s employer)
Not be eligible for Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP).
Have U.S. citizenship or proof of legal residency (Lawfully present immigrants with household incomes less than 100 percent FPL may also be eligible for tax subsidies through the Marketplace if all other eligibility standards are met).
If you’re married you must file your taxes jointly.
Cost Sharing Reduction
Cost sharing reductions are the second type of financial aid available. When you utilize covered health care services, cost sharing reductions reduce your out-of-pocket costs related to deductibles, copayments, and coinsurance. Cost sharing reductions are available to anyone who qualifies for a premium tax credit and has household incomes ranging from 100 to 250 percent of the poverty line. Cost sharing reductions (CSR) are only available through silver plans, as opposed to the premium tax credit, which can be applied to any metal level of coverage. CSRs are applied to a silver plan for qualified individuals, basically making deductibles and other cost sharing more comparable to that of a gold or platinum plan. Individuals earning between 100 and 250 percent of the FPL can use their premium tax credit to any metal level plan, but they can only receive cost sharing subsidies if they choose a silver-level plan.
Health Plan Tiers
When you buy health insurance through the federal or state Marketplace, the plans available are divided into four metal tiers: bronze, silver, gold, and platinum. The metal tiers allude to the portion of your medical treatment that each tier will cover, not the quality of care you will receive with one of these plans. Which plan tier you pick determines the amount of the bill you pay. The higher the coverage, the higher the cost, but the less you will have to pay out of pocket.
Bronze plans will cover 60% of costs; you will pay 40%
Silver plans will cover 70% of costs; you will pay 30%
Gold plans will cover 80% of costs; you will pay 20%
Platinum plans will cover 90% of costs; you will pay 10%
Why You Need Health Insurance
The most important advantage of having health insurance is having access to the care you need. Health insurance provides you with access to a vast network of doctors, specialists, hospitals, and laboratories. This network collaborates with you and with one another to assist you in focusing on prevention and wellness. In fact, the majority of healthcare plans provide free preventative services, such as immunizations and testing. To help you stay healthy and avoid illnesses and their consequences.
Furthermore, the Affordable Care Act requires Marketplace plans to cover pre-existing diseases. This means that even if you have a pre-existing condition, you can receive care without being rejected coverage or charged extra because of it. Because you’ll have regular access to the doctors and experts you need, your healthcare plan will also help you manage your care for any chronic illnesses you’re living with.
Your health insurance covers all of the greatest strategies to maintain your health. Having access to this type of continuous care can essentially lead to a longer and better quality of life. According to the National Library of Medicine, persons between the ages of 17 and 64 who did not have health insurance had a 40% higher mortality risk than those who did!
How EZ Can Help
Working with an agent saves you time and stress because you won’t have to decipher legal language or read fine text. Agents handle all of the legwork. So, you may rest assured that your coverage will best match your financial and medical requirements. Not to mention, EZ agents can save you hundreds of dollars on your health insurance premiums each year. We accomplish this by scouring the market for the most affordable plans, both on and off the market. In addition to locating and utilizing any available savings.
We don’t only assist you in finding a plan, we also assist you in keeping it up to date. When the time comes, we are also here to help you in filing claims with your insurance company and renewing your policy. To begin, enter your zip code in the box below. Alternatively, contact 877-670-3557 to speak with one of our licensed agents.
It’s no secret that health savings accounts (HSAs) offer numerous tax benefits. These tax savings are one of the primary reasons why HSAs are gaining traction in the market. However, while HSA participation continues to increase at a rapid pace, the majority of the attention when it comes to HSA tax benefits is focused on employees. While those HSA tax benefits are great, there are less well-known HSA tax benefits for employers that are just as significant. These employer HSA tax benefits should not be kept a secret. So, whether you’re an employer that already offers an HSA program to your employees or you’re just looking into the affordability of an employer-sponsored HSA program for your company. You need to understand HSAs and the benefits they have for you.
What is an Employer Sponsored HSA?
An HSA is a tax-advantaged savings account that can be used to help your employees pay for eligible medical expenses when combined with a high-deductible health plan (HDHP). An HSA-compatible HDHP often has lower monthly premiums than lower-deductible health insurance plans. And HSA contributions are tax-deductible up to annual IRS limits. A small business can deduct all employer contributions to employee HSAs as an income tax deduction. Employers also do not pay payroll taxes on employees’ pre-tax contributions. Employees’ lower premiums under an HSA-compatible HDHP may result in cheaper cost-sharing for the business overall. It is important to note that not all HDHPs are HSA-eligible, so be careful when choosing.
Setting Up An HSA
Creating an HSA is a simple process. Here’s a rundown of the steps.
Determine Eligibility – Determine whether your employees have HSAs through approved HDHPs supplied by the company or acquired privately. Then, select how much employees will contribute to their HSAs and whether your company would match their contributions.
Create a Cafeteria Plan – A section 125 cafeteria plan allows employees and employers to contribute to the HSA tax-free. Employees, spouses, and dependents can all participate in the plan. One of these programs might be set up by your company or a payroll agency. Employers must write a document outlining the benefits offered, contribution limitations, and participation restrictions. As well as other information required by the IRS before launching a section 125 benefits plan. Depending on the plan, they may also be required to conduct non-discrimination tests to verify that it does not favor highly compensated or specific employees. Starting a cafeteria plan can be challenging without the right understanding. Which is why many employer’s hire a third-party administrator to set up and administer their cafeteria plan.
Manage Contributions – Employees can submit HSA payments to their custodian or bank-administered account after the Section 125 plan is implemented. If you wish to contribute to your workers’ HSAs, you must submit your payments to their accounts as an employer. At the close of the fiscal year, your company must also supply your employees with the necessary tax documentation, including W-2s.
Keep in mind that annual HSA contribution restrictions must be followed by both employees and employers. For 2023, the HSA contribution limits for self-only coverage are $3,850 and $7,750 for family coverage. For 2024, the HSA contribution limits for self-only coverage will be $4,150 and $8,300 for family coverage. Those aged 55 and up are eligible for a $1,000 catch-up contribution.
Employer Tax Benefits
When it comes to tax benefits, HSAs have the unrivaled ability to benefit both employees and employers. While employees can profit from the triple tax advantage that HSAs provide. Businesses can also benefit from significant HSA tax advantages. Employers can obtain HSA tax benefits through payroll and FICA tax benefits. To maximize HSA employer tax benefits, you must first set up your cafeteria program.
With this setup, you benefit from even lower payroll taxes if you choose to contribute to your employees’ HSAs. Because your employer HSA contributions aren’t included in your employees’ income and thus aren’t subject to federal income tax, Social Security or Medicare taxes (commonly known as FICA tax). Employer HSA payments are also tax-deductible as a company expense, so you gain both on the front and back end. It’s important to know that FICA tax is a 15.3% split tax burden between the employee and the business. Company FICA tax savings can be so significant that many employers prefer to increase their company HSA contributions in order to maximize their FICA tax savings. This method can be a sensible way to increase your employees’ total compensation while keeping your bottom line in mind.
Maximize Your Benefits
Regardless of how you handle employer HSA contributions, the next step in making the most of your HSA program and maximizing employer tax benefits is to increase both the number of employees who actively participate in your HSA program and the amount of pretax money they contribute to their HSAs through payroll deduction.
As an example, a firm with 100 employees that use an HSA through its cafeteria plan can save more than $50,000 per year in FICA tax savings alone. That employer would save six figures—a significant sum—in two years. Money that would otherwise have been paid out as a tax expense. Essentially, the more employees who have HSAs and contribute to them, the lower your payroll taxes will be, as will your income and FICA tax savings.
Small Business Owner’s HSA
You may be wondering if you qualify for an HSA as a small business owner. This is determined by the nature of your business as well as your health insurance. A requirement for establishing and contributing to a small business HSA is that your health insurance needs to be an HSA-eligible HDHP. When it comes to HSA contributions for individuals, business owners face different requirements than their employees. There are extra requirements that apply depending on the type of small business you run.
Self-Employed HSA
A self-employed HSA option is fundamentally identical to choices for employers. Because an HSA is not a sort of insurance, you must have an HSA-compatible health plan as a self-employed individual. According to IRS HSA rules, you can only open an HSA if you have an HSA-eligible high-deductible health plan (HDHP). It doesn’t matter if the qualified HDHP is yours or your spouse’s; it just has to be HSA-eligible. If you are classified as a dependent on another person’s tax return, you are not eligible for a self-employed HSA option.
A self-employed HSA can be not just a way to get tax savings on healthcare spending, but also an essential component of a retirement plan. Because, in most cases, self-employed individuals and small business owners do not save as much for retirement as those who are traditionally employed. An HSA can help you save money on eligible medical expenses while also serving as a retirement account for you.
You can deduct some of your contributions on your personal income tax return if you set up an HSA and contribute to it as a sole proprietor. You can claim the deduction if you make a profit during the tax year. However, you may not contribute more to your HSA than your net self-employment income. While many employees can contribute to their HSA before taxes, as a self-employed individual, you can make HSA payments after taxes and then deduct them as a line item on your Schedule C. It requires slightly more paperwork, but it is still a simple approach to save money on qualified medical bills.
S Corp and C Corp Owner HSAs
The IRS has particular requirements for specific corporate entities based on ownership—whether held by individuals or investors. Certain corporate entities are restricted from receiving HSA funding as a result of these requirements. HSA financing limits apply if you own 2% or more of a S Corp. When it comes to employer contributions to a S Corp HSA, the company cannot provide owners with a tax-free contribution. Contributions from the S Corp firm to the owners’ HSAs are taxable income. You cannot make pretax contributions to your HSA. While S Corp HSA contributions are taxable to the owners, they are also tax deductible to the company as a compensation expense. Even after-tax HSA contributions provide a considerable tax break on eligible medical expenses.
On the employee side, or if you own less than 2% of a S Corp, the restrictions do not apply. Which means that a S Corp business can make tax-free contributions to their employees’ HSAs as long as they comply with current IRS standards on employer contributions. Because a C Corp is an entirely different legal entity, the IRS treats owners the same as employees. If you own a C Corp, you are eligible for your company’s HSA, including making pretax contributions to your HSA account. Remember that all contributions must adhere to current IRS requirements on employer HSA contributions.
LLC HSAs
If you are a single member LLC with an HSA-eligible high-deductible health plan (HDHP). Your HSA will function similarly to that of a self-employed sole owner. While you will not be able to contribute to your HSA before taxes, you will be able to contribute after-tax to your HSA and claim a line item deduction on your Schedule C. Bottom line, even as a single member LLC, having an HSA saves you money on healthcare costs. However, if you are an LLC with workers, you cannot directly participate, but offering this type of HSA cafeteria plan to your employees has numerous advantages.
Working With EZ
If you want to save money while still looking after your employees’ health and finances, offering an HDHP with an HSA is a terrific alternative. If you’re not sure where to start with HDHPs, HSAs, and cafeteria plans, EZ can help you get started and answer all of your questions along the way. We can also provide you with quick, accurate quotes and enroll you in an excellent plan – all for free! There is no hassle and no obligation. To get started with us today, simply enter your zip code in the box below. Or call 877-670-3531 to talk with a representative immediately.
Want to spend less on health insurance? You’re not alone! Most of us feel like health care costs go up every year, making it harder and harder to save money. Health insurance is the most expensive part of healthcare for nearly everyone, but if you think that the cost of health insurance is a reason not to get it, you should think again. Recent studies have found that uninsured medical bills are the cause of more than half of all bankruptcies. About 530,000 American families file for bankruptcy each year due to unpaid medical bills and medical problems.
While health insurance can be pricey, having no coverage or the wrong coverage could cost you even more. The last thing you want to worry about in a medical crisis is finances. So, health insurance is a must, but there are things you can do to make it affordable. Below we’ll look at how to save money on your health insurance so you stay covered without breaking the bank.
Health Insurance Costs
The amount you pay for health insurance will depend on what kind of health insurance you have, and of course what kind of services you need. Below are all of the costs associated with having health insurance that you should keep in mind when choosing your plan.
The amount you pay each month for your health insurance coverage is called your premium. This is probably the health care cost you know best because you pay it every month, even if you didn’t use any health services during that time. The average cost of premiums monthly by tier is:
Catastrophic – $332
Bronze – $440
Silver – $560
Gold – $604
Platinum – $737
These prices vary depending on you, your plan, your insurer, and your location. Premiums can also increase or decrease yearly.
A copay is a flat fee you pay for certain types of health care. If your insurance requires a $45 copay and you go to your primary care doctor, you’ll have to pay $45 at the time of your visit. Do your homework ahead of time so you know exactly what to expect.
Deductible
A health insurance deductible is the amount you have to pay for health care each year before your insurance starts to pay for some of your costs. For example, if your deductible is $1,500, you’ll have to pay the first $1,500 of all the costs that are covered. Keep in mind that some tests and annual checkups are covered by your insurance even if you haven’t met your deductible yet. Most plans don’t count copayments toward your deductible. Depending on your health insurance plan, the details can be different, so it’s important to know what it covers.
Coinsurance
Even after you’ve met your deductible, your health insurance won’t cover all of the costs. Instead, you’ll pay a percentage of the costs until you reach your out-of-pocket maximum. Coinsurance is the part of your health care costs that you are responsible for paying. So, if your coinsurance is 15%, you’ll have to pay 15% of the covered costs after you’ve met your deductible. The remaining 15% is paid for by your insurance company. That means you will have to pay $30 of a $200 bill.
Ways To Save On Health Insurance
We’ve talked a lot about prices. You might be thinking, “Wow, that’s a lot of ways to spend money!” How can I get money back? Wonderful question. We’re glad to say that we can help. These simple ideas can help make healthcare more affordable:
Shop Around
Most people don’t think about their plan for the next year and just keep the same one year after year. If you don’t look into your options, it could cost you a lot of money because your premiums could go up or the services that are covered could change. This is why it’s important to shop around not just for price, but also for services and coverage. Plans with low premiums will have higher out-of-pocket costs like deductibles and copays. People who know they won’t meet their deductible should choose these plans, as it is cheaper monthly.
On the other hand, there are plans with higher premiums, but lower deductibles. This is better for people who need more healthcare and have a better chance at meeting their deductible. Shopping around and comparing different insurance companies and plans can take a lot of time and hard work. With our highly trained agents who are experts in your area, EZ.Insure does all the work for you. Your advisor will do the work for you and sign you up for a plan that fits your needs in terms of coverage and price- all for free.
Stay In-Network
You’ll almost always save money by going to doctors, clinics, and hospitals in your plan’s network. In exchange for being part of the plan’s network, these in-network providers agree to charge less for their services. Getting care outside of your plan’s network could cost you more depending on your plan. If you have an HMO plan it’s likely you’ll have to pay the full cost of care from a provider who isn’t in their network. If you have a PPO or a POS plan on the other hand, some of your out-of-network care might be covered, but even with some coverage, you’ll still have to pay more for going out of network.
Look For Discounts
Even after you’ve chosen the best plan for your needs and budget, you can still save money. You can also look for discounts on health care that you might be able to get. Some doctors will give you a discount if you pay for a procedure ahead of time. If you know you need a colonoscopy, ask your doctor if you can save money if you pay for it in advance.
Understand You Plan’s Limitations
All plans have limitations to what they will cover. You can’t just assume that certain services and procedures will be covered. Instead, you should read the fine print to learn about the specific benefits and limits of your plan. You don’t want to get a surprise medical bill because you thought you were covered for a service.
Consider a Tax Advantaged Savings Plan
Several plans that help you save money on taxes can help you pay for health care. People with high-deductible health plans (HDHPs) can open a health savings account (HSA). You put money into your HSA and can take it out tax-free to pay for things like deductibles, copayments, and coinsurance. Your employer may offer an HSA, but you can also start one on your own and keep the money. Employers set up and pay for health reimbursement arrangements (HRAs). Employees can’t put money into their accounts, but they can take money out for medical costs that qualify.
Employers also offer FSAs, which stand for flexible spending accounts. Employees put money into the account before taxes are taken out, and they can take money out tax-free for qualified medical expenses. HRAs and FSAs don’t need a health plan with a high deductible, but you usually have to spend the money by the end of the year, and if you quit your job, you lose the account.
Find Out If You Qualify For A Premium Tax Credit
You might be eligible for the Premium Tax Credit if you buy your insurance on the open market. The government made a tax credit for people whose household income is between 100% and 400% of the federal poverty line. This helps make the cost of getting a plan through the Health Insurance Marketplace more affordable. This is for people who make too much to qualify for Medicaid or Medicare but still can’t afford health insurance. You can apply for a premium tax credit when you file your taxes to help pay for your premiums.
Work With An EZ Agent
An insurance agent can help you compare the costs and benefits of different insurance plans to find the one that gives you the coverage you need at the price you want. We can help you deal with all of this at EZ. By working with one of our licensed, highly trained agents, you can get all the answers you need in one place. They can compare all of your plans to make sure you get the best coverage for you. They can also explain all the legal jargon in your insurance information packet from step 1. All of this is done for free! No bother, and nothing to do. To get started, enter your zip code in the box below to get free instant quotes, or call 877-670-3557 to talk to one of our agents.
Because of the constant yearly rise of health services and health insurance premiums, healthcare has become a large portion of everyone’s personal budget. However, as these costs have increased over the last few decades, medical savings accounts have come into play to help offset them. There are a few different accounts you can choose from to help you save money towards your healthcare, but we’re only going to be looking at 2 of them: Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs). Both HSAs and FSAs are savings accounts that allow you to save specifically for medical expenses. Aside from that fact, the two accounts differ in a number of significant ways. In this article we’re going to compare and contrast them so you get an idea of what they are, how they work, and if one of them would be beneficial to you.
Health Savings Accounts (HSAs)
Health Savings Accounts are not typical savings accounts, and they are only available to people with a high-deductible health plan (HDHP). As of 2023 an HDHP is defined as any plan with a minimum deductible of $1,500 for individual coverage or $3,000 for family coverage with an out-of-pocket maximum of $7,500 and $15,000 respectively. An HSA is a triple tax advantaged account that can be used to pay for qualifying medical expenses. It’s known as “triple tax-advantaged” because your contributions to your account are not taxed, the money in the account is never taxed while it’s in the account, even if it earns interest or investment returns.
Additionally, as long as you use your HSA funds for qualified medical expenses, your withdrawals will also never be taxed. However, if you use your HSA funds for anything besides qualified medical expenses you will have a 20% tax penalty. Another great thing about HSAs is that you can actually invest your funds as well, similar to the way you would a 401K. This lets your HSA actually make you money, if you invest properly you could end up with a nice health savings account keeping you from having to pay for little to any of your healthcare.
How HSAs Work
If you open an HSA with your HDHP, you will deposit money into the HSA that you can use to pay for qualified medical expenses that your health plan does not cover. Which are any services that the IRS recognizes as a eligible medical costs these expenses include:
Acupuncture
Ambulance services
Birth control/contraceptive devices
Blood pressure monitors
Blood sugar test kits/test strips
Chiropractic therapy/exams/adjustments
Contact lenses
Copayments
Dental care
Dermatological services
Diagnostic services
Eye exams
Eye surgery
Flu shots
Gynecological care
Incontinence supplies
Infertility treatments
Insulin and diabetic supplies
Laboratory fees
Lactation expenses
Legal sterilization
Laser eye surgery/ LASIK
Menstrual care products
Nasal strips
Obstetric care
Over the counter (OTC) treatments containing medicine (i.e., cold treatments, pain relievers, sinus medications, etc.)
Physical exams
Pregnancy test kits
Smoking cessation programs
Therapy or counseling
Treatment for alcohol or drug dependency
Vaccinations
Vision care
Wrist supports/elastic straps
X-ray fees
You can use the HSA funds to pay all your medical bills until you reach your plan’s deductible, and then you can use them to cover your coinsurance or copayments until you reach your annual out-of-pocket maximum. Additionally, unlike other health spending accounts, HSA funds will never expire. Your funds roll over into the new year, every year so you don’t have to rush to spend the money in the account. One thing you should note though, is that HSAs do have a contribution limit, these limits change annually but as of 2023 if you have an individual plan you can only contribute up to $3,850 for the year. For family plans the limit is $7,750.
Flexible Spending Accounts (FSAs)
A Flexible Spending Account, sometimes called a Flexible Spending Arrangement, is a type of savings account that offers you specific tax advantages. You don’t actually set these accounts up, instead they are set up by your employer. FSAs let you contribute a portion of your pay into the account. Your employer can also choose to contribute to the FSA on your behalf, sort of like when your employer matches your 401K except the employer decides exactly how much they contribute. The FSA funds are then used to reimburse you for eligible medical and dental expenses.
How FSAs Work
An FSA is a voluntary plan that allows employees to contribute up to $3,050 a year (as of 2023) to pay for eligible medical expenses that are not covered by their health insurance plan such as:
Health insurance copayments
Doctor’s visits
Coinsurance payments
Dental work
Vision expenses
Prescriptions
Therapy and counseling services
Chiropractic care
Acupuncture
Hospital fees
Surgery costs
Diagnostic services
Allergy testing
If your employer offers group health insurance they can also offer these FSA plans as an additional employment benefit. Your employer can choose to also contribute to your FSA, they can choose to match your contributions or decide to pay a smaller amount. They are not required to contribute though, so some employers might not add into your FSA at all. If your employer does choose to contribute, their contribution typically won’t count towards your yearly limit no matter how much they contribute.
The Differences
You can’t have both of these plans at the same time, so if your employer offers an FSA but you’re also considering an HSA, you’ll want to keep these key differences in mind when you’re making your decision.
Qualifications
Compared to FSAs, HSAs have stricter eligibility requirements. To qualify for an HSA, you must have an HDHP. The HDHP has to be your only health insurance. Additionally if you are eligible for Medicare or are a claimed dependent on someone else’s taxes you can not open an HSA. On the other hand FSAs have to be set up by your employer, which automatically excludes self-employed or unemployed people. Your employer does have some qualifications they have to meet to be able to offer FSAs. For example they can only contribute to employee FSAs if they own less than 2% of the company. However, if they already offer these plans then there’s no other eligibility requirement on your end, all employees are eligible even ones without health insurance plans.
Annual contribution limits
Since contributions to these accounts are tax free they lower your taxable income. Because of this the IRS has placed limits on these plans. For FSAs the contribution limit is $3,050 as of 2023. For HSAs it’s $3,850 for individual plans and $7,750 for family plans.
Rollover rules
One of the biggest advantages of an HSA is that your funds roll over, meaning there are no time restrictions on using your funds. Since the account belongs to you, you get to decide when and how to use the funds. However for FSAs it’s not as simple. Unused funds are not automatically carried over into the new year. Since your employer owns the plan they decide what happens to the funds. Employers have 3 choices when it comes to rolling funds over:
Forfeiture – This means any unused funds will not roll over. Instead, they will be transferred to the employer.
Grace period – This is a 2 ½ month period after the plan year ends to use the last of the fund in the account, after this time frame, the funds then go to your employer.
Carryover- This allows employees to take $500 of the unused money over to the new year’s plan. Any funds left in the account after the $500 is carried over goes to the employer.
Changing contribution amounts
This is another point where HSAs are simple. You can contribute any amount you want at any time, you don’t have to keep the same contribution every time. Whereas with FSAs your contribution amount stays the same through the year. You can only change your contribution amount 3 times. First at open enrollment, when the plan renews you can decide to change your contribution amount for the new year. Next is if there is a change to your family situation such as a marriage, death, or birth you will be allowed to adjust the amount. Lastly, if you change employers when you enroll in your new employer’s health plan, assuming they offer one, you can select your new contribution amount since it’s an entirely new FSA.
Keeping your account when changing jobs
Unlike FSAs, HSAs follow you no matter how many times you change jobs because your account belongs to you. With FSA’s, they belong to your employer so unless you qualify for COBRA, you will no longer have access to your FSA if you leave your job.
Which Is Better?
If you qualify, the higher contribution limits and contribution rollover of HSAs make it the better option overall. HSAs are more flexible than FSAs, allowing you to save money over time for potential medical expenses. However, unless your job allows you to roll over $500 annually, your FSA balance will not build up over time. Depending on your employer’s decisions, unused funds are generally forfeited to your employer at the end of this year, meaning if you didn’t have many medical expenses for that year you could be losing money.
However, most of the time choosing between them is more dependent on your situation rather than which one you actually prefer to have. This is because the decision will depend if your employer even offers an FSA and whether or not your health insurance plan is an HDHP.
Getting Help With EZ
Both of these options can be excellent tax-free ways to save, invest, and pay for medical expenses, and EZ can help if you’re interested in HSAs. If you choose an HDHP, open an HSA as soon as you are eligible and begin contributing. Since these accounts continue to be one of the most effective ways to reduce expenses and improve your overall financial standing. To begin saving immediately, enter your zip code in the box below to receive free instant quotes. Or, contact one of our licensed agents at 877-670-3557.
If you’re looking for a health insurance plan, you probably feel like you’ve had a lot of terminology to learn. Especially when it comes to the out-of-pocket costs that you’ll be responsible for with your plan. It’s true that there’s much more to plans than just monthly premiums. You’ll most likely have to think about copayments, coinsurance, and annual deductibles, as well. And it’s this last expense that we’re going to look at here. Your annual deductible is the amount that you will have to spend on covered medical expenses before your health insurance plan begins to pay its share.
And when it comes to deductibles, you actually have choices. You can choose a high-deductible health plan (HDHP) or a low-deductible health plan (LDHP). But what’s the difference between these types of plans? This article will guide you through the specifics of HDHPs and LDHPs. As well as how to determine which type of plan will serve your needs most effectively based on your needs.
High Deductible Health Plans
A high deductible health plan (also known as a HDHP). As the name implies, is a type of health insurance policy that has a higher annual deductible than other types of healthcare plans. This difference can even be in the four-figure range. Meaning that you will most likely have to pay thousands of dollars out-of-pocket for medical care before your plan will begin to cover any expenses.
With that being said, monthly premiums for these plans tend to be lower than for other plans. And you will still have routine preventive care covered in full before you meet your deductible. As with any ACA-approved plan. The actual deductible you will have if you choose a HDHP will vary depending on your plan and insurance company, but there is a minimum deductible amount for a plan to be considered a HDHP, which changes each year. For 2023, the minimum annual deductible for individuals is $1,500, while the minimum for families is $3,000.
Advantages of HDHPs
As mentioned above, if you choose a HDHP, you will have a plan with a high deductible. But lower monthly premiums. This means that if you know that you will most likely only use the plan for preventive care rather than more extensive medical treatment. You could save money by going with a HDHP.
Other than lower monthly premiums, there is one other big advantage to HDHPs. You can open a health savings account (HSA) in conjunction with a HDHP; in fact, in order to have an HSA, you must have a HDHP. HSAs can be a great way to help pay for your out-of-pocket medical expenses. They are tax-advantaged accounts that can be used to pay for qualified medical expenses that your plan doesn’t pay for. Such as acupuncture and dental expenses. Your contributions to your health savings account are not subject to income tax. And they can be used to reduce the overall cost of your high deductible.
Disadvantages of HDHPs
The high cost associated with these plans is the most significant and obvious disadvantage of HDHPs. If you have a higher deductible, it means that you are responsible for paying a greater portion of your healthcare costs out-of-pocket before your plan begins to contribute. This may put a significant dent in your financial resources. Particularly if you are forced to deal with unanticipated problems relating to your health.
Low Deductible Health Plans
One of the most significant differences between a HDHP and a LDHP is that a low deductible plan typically has a lower deductible. But a higher monthly premium payment.
Because of their lower deductibles, this type of plan is typically chosen by people who see their doctor more regularly. And who need more medical care. If this is the case for you, you might find that the higher amount you’re paying in monthly premiums is balanced out by the low deductible, since once you meet this lower amount, your insurance company will take care of your remaining costs. That could mean you’ll actually end up paying less out-of-pocket. In addition, LDHPs do not qualify for a health savings account (HSA), which is another difference between the two types of plans.
Advantages of LDHPs
Having a plan with a low deductible means you’ll have less to pay out-of-pocket if you need to access healthcare services more frequently, or if you have a true emergency or a catastrophic illness or injury, both of which can be very expensive. People who are older or who have a medical history that includes chronic conditions or illnesses may find that selecting a plan with a low deductible is the better option for them. Others who might benefit from this type of plan include:
Women who are pregnant or who have the intention of becoming pregnant
People who undergo a variety of specialized treatments or need expensive medications, such as those with cancer or on dialysis
Any individual who is contemplating undergoing a surgical procedure within the next year
Disadvantages of LDHPs
Plans with low deductibles tend to have higher monthly premiums, since insurance companies will only cover a greater percentage of your care if you pay a higher premium. These premiums can feel like a burden each month, and if you don’t end up using your plan as often as you thought you might, you could start to feel like you’re wasting money.
Who Should Choose a High Deductible Health Plan?
As we pointed out above, a HDHP might be a good choice for you if you are healthy and anticipate having few to no healthcare expenses. In these circumstances, the lower monthly premiums that you would be paying for your “just in case” plan (which will also cover your preventive care), would save you money over a more expensive plan.
In addition, if you can’t afford a low deductible health insurance plan, you can still get yourself at least some level of coverage with a HDHP. And it’s important to have a plan, even if it has a high deductible, because health insurers negotiate rates with providers. This means you will pay less overall for products and services related to your health if you have health insurance than if you do not have health insurance.
In addition, your high-deductible health plan (HDHP) will pay for necessary medical care, such as preventive services, if you purchase the plan on the individual market. But even if you have enough money to pay for a low deductible health plan, it may be worthwhile to consider a high deductible health insurance plan. Remember that if you have a high deductible health plan (HDHP), you can help to offset your out-of-pocket expenses with a health savings account (HSA).
Who Should Choose a Low Deductible Health Plan?
Again, a health insurance policy with a low deductible is likely to be beneficial to you if you are an older person, if you are not in good health, if you have a chronic condition. If you are planning to start a family, or if you simply make frequent use of your health benefits.
If you have costly health issues, purchasing a LDHP could save you money over the course of the year. Even with the higher premiums. If you switched to a HDHP, the amount you would save in premiums would be a much smaller fraction of the total amount you would pay in deductibles with your HDHP. And, frankly, many individuals find that it is simpler to pay a slightly higher amount on a monthly basis as opposed to a much larger sum all at once. Getting a low deductible health insurance plan might be the best choice for you if you don’t want to deal with the stress of potentially expensive medical care.
How to Choose
It is difficult to make a direct recommendation for a plan without knowing your unique financial situation and your health status. But we can offer the following advice to help you make a decision. Your best bet, though, is to speak to an EZ agent. Who can take your specific circumstances into account and find the best plan for you.
1.Look for discounts
You might be eligible for assistance with your monthly premiums or cost-sharing expenses, depending on your income. So, before you write off a type of plan as too expensive. Ask an EZ agent if you qualify for subsidies or tax rebates.
2.Narrow down your choices
Think about the maximum amount of money you are willing to spend each month on your premium and go from there.
3.Look at additional features
When it comes to shopping for health insurance, deductibles are just one of many factors to take into account. Consideration should also be given to the size of the plan’s network, out-of-pocket maximums, and the structure of the plan. As well as the types of costs that are covered. After you have made a comparison of your expected medical costs for the year with the coverage options available to you. Look more closely at the plans you are considering. Ensuring that they provide the appropriate type of coverage for the amount of money you anticipate spending on healthcare.
4.Set your priorities
Your choice between a high deductible plan and a low deductible plan may come down to what you value more. The ability to save money on premiums if you are fortunate enough to not have many medical expenses. Or the peace of mind that comes from knowing that you won’t have to pay a deductible if you do end up needing more medical care. Doing some number crunching before making your decision might make things simpler for you.
Let EZ Help You
Do you need assistance comparing different plans and choosing the one that is best for your budget and healthcare needs? EZ.Insure is here to help! We will connect you with one of our dedicated, highly trained agents. Who will discuss all of your options with you and assist you in selecting the insurance policy that meets your needs, all at no cost to you. That’s right, there are no hidden fees associated with any of our services. EZ.Insure makes the entire process simple, easy, and quick. To get started, simply enter your zip code in the bar below. Or you can speak to an agent by calling 877-670-3557.
Do you have a Health Savings Account (HSA)? If not, you could be missing out on some savings. HSA allows you to set aside pre-tax money to help pay for out-of-pocket medical expenses; they are particularly helpful for people with a lot of medical expenses, but they are not compatible with all health insurance plans. Before the Open Enrollment Period is over, find out how HSAs work, if you qualify for one, and if it is worth setting one up.
What Is a HSA?
HSAs let you to set aside a certain amount of pre-tax income to pay for healthcare needs.
The ACA’s Open Enrollment Period runs from November 1 – January 15 this year, so now is your chance to make sure that your health insurance will work for you next year. That includes considering new ways of helping fund your healthcare expenses, like with a Health Savings Account (HSA). So how do these accounts work?
HSAs are savings accounts that allow you to set aside a certain amount of pre-tax income to pay for healthcare needs/bills. There are a few important things to note about these accounts: first, you are only eligible for a HSA if you are enrolled in a qualified high-deductible health plan. Next, there is a limit to how much you can put into these accounts each year: limits on annual HSA contributions for coverage beginning in 2022 are $3,650 for individuals and $7,300 for families. Some employers will contribute to your HSA; if they do so, you will still not be able to exceed the annual contribution limit. The money that you both contribute is pre-tax, earns tax-free interest, and will not be taxed when you withdraw it to use for qualified medical expenses.
Aside from being an excellent way to pay for your out-of-pocket medical expenses, HSAs have:
Tax benefits– Any money put into your plan up to the annual limit is untaxed. If you enroll in a HSA separately from an employer’s health insurance plan, your HSA contributions are tax-deductible. This means that if you put the maximum amount of $3,650 into your HSA and make $50,000 annually, you will be taxed as if you earn $46,350, which could possibly put you into a lower tax bracket. And if your account grows, you will not be taxed on the growth, nor will you be taxed if you choose to make any withdrawals for medical expenses.
Investment options– You have the ability to invest the capital of your cash account, so you can grow your untaxed funds.
Do You Qualify?
Not everyone qualifies for a HSA. In order to be eligible for one, you must:
Be covered under a qualified high-deductible health plan (HDHP). For 2021, a HDHP is a health insurance plan with a deductible of at least $1,400 for individual coverage or $2,800 for family coverage.
Not be covered by any other medical plan.
Not be enrolled in Medicare.
Not be claimed as a dependent on someone else’s tax return.
Not be enrolled in TRICARE or covered by medical benefits from the Veterans Administration.
As pointed out above, in order to set up a HSA, you need to first have a high-deductible health plan (HDHP), so before you decide whether a HSA is right for you, you’ll have to decide if a HDHP is also right for you. These plans are great for people who are generally healthy, and do not see the doctor often, because the deductible is so high. But in return for the high deductible, you will have low monthly premiums, so if you’re looking to save money on your monthly premiums and think you will not reach your deductible amount because you don’t go to the doctor aside from annual checkups, this might be the right type of plan for you.
HSAs are a great savings tool that will help you pay for any out-of-pocket medical expenses, but you’ll first have to consider if a HDHP is right for you and/or your family. If you are interested in a HDHP and a HSA, an EZ agent can help. We will do all the research and comparison for you and find you the plan that will best suit your needs. To compare quotes in minutes, at no cost, enter your zip code in the bar above, or to speak to an agent, call 888-350-1890.
Maximize Your Benefits
Most people don’t think about their plan for the next year and just keep the same one year after year. If you don’t look into your options, it could cost you a lot of money because your premiums could go up or the services that are covered could change. This is why it’s important to shop around not just for price, but also for services and coverage. Plans with low premiums will have higher out-of-pocket costs like deductibles and copays. People who know they won’t meet their deductible should choose these plans, as it is cheaper monthly. 
