Utah Health Savings Account

What is a Utah Health Savings Account or a High Deductible Health Plan?

HDHP (High Deductible Health Plan) are used in conjunction with an HSA (Health Savings Account) A High Deductible Health Plan (HDHP) is a Utah health insurance plan with lower premiums and higher deductibles than a traditional health plan.

A health savings account (HSA), is a medical savings account that has tax advantages available to taxpayers who are enrolled in and used in conjunction with a High Deductible Health Plan (HDHP). Funds deposited into an HSA account are not subject to federal income tax.

Unlike a flexible spending account (FSA), deposited funds roll over and accumulate year over year if not spent. HSAs are owned by the individual and funds may be used to pay for qualified medical expenses without federal tax liability. Withdrawals for non-qualified medical expenses are subject to penalty just like when you take money out of an IRA early.

Here is a brief video that will help describe these types of plans

Can you give me an example of what these plans are like?

The best example of these types of plans that we can give you is car insurance. These plans are just like car insurance in the way that with car insurance, if you need a tune up, new tires, oil change or things like that, the insurance doesn't kick in. But if something serious were to happen to your car, the car would be covered 100% after your deductible.

Same with an HSA, Until you meet your deductible, nothing is covered. Once you meet your deductible, all procedures, prescriptions, doctor visits, etc. are covered completely. (Some carriers will cover, prior to deductible, one wellness visit per year, per person.)

Who is eligible in Utah to establish an HSA?

You must have a qualified high deductible health plan and not have any disqualifying coverage.

You cannot be enrolled in Medicare, which usually means that anyone over 65 will not qualify.

You cannot be claimed as a dependant on another person's tax return. However, you can keep their HSA once they become ineligible.
Family members may have their own HSA, provided they each meet the eligibility rules. They can also be covered through the HSA of someone else in the family. For example, a husband may use his HSA to pay expenses of his spouse even though she has her own HSA.

What can I use the money that I have deposited into my account on?

You are able to use the money, tax-free, on what are called qualified medical expenses. So, what is that you might ask and what qualifies. You can find those answers on the Health Savings Account Qualified Medical Expenses or call us and we can help clarify.

Basically, not only does it cover things that may be included in health insurance plan, but also things that may not be covered like over the counter medications, dental and vision costs, lodging for medical care, medical equipment, mental health expenses and pregnancy and maternity costs. One thing to remember is that even though you can use the money in your account for these expenses, not everything counts towards your deductible.

At death, if a surviving spouse is the designated beneficiary of an HSA, it becomes a HSA for that widow or widower. If someone other than a surviving spouse is the designated beneficiary, the HSA is terminated as of the date of death and the fair market value becomes taxable income to that person. If there is no designated beneficiary, the remaining assets become part of the deceased's estate.

What are the advantages and disadvantages of these types of plans?

Advantages:

The money deposited in an HSA provides both federal and state income tax deductions in Utah with no income limits! Withdrawals to pay for qualified medical expenses are tax free.

A health savings account is portable and can be transferred to whatever bank or financial institutions of your choice, even if you change employers.

There is usually only one deductible to be met for the entire family instead of having separate deductibles for each person.

Unlike a flexible spending account that needs to be used by the end of each year for tax savings, money that is in your HSA stays in your account and rolls over from year to year. It can earn tax free interest when it is not being used and can have many different investment choices.

Lower premiums for HSA eligible health insurance policies than traditional plans with similar deductibles and coinsurance.

You can withdraw money out of your HSA account for any reason after age 65 without penalty.

You should consider an HSA if you've been paying more for health insurance premiums that you've been using in health care.

Disadvantages:

HSA plans generally have higher deductibles than traditional plans and do not pay for any expenses until the deductible is met compared to traditional health insurance plans that may cover doctor visits, prescriptions, although most plans will cover at least one wellness visit per year.

Tax penalties for withdrawals for any reason other than for qualified medical expenses unless aged 65 or older.

If you have major health issues, premiums may be charged at a higher rate than normal, certain illnesses may be not be covered for a certain or indefinite period of time, which is known as a rider, or you may be declined coverage under an individual health insurance plan.

If you cannot obtain coverage, however, because of health issues, you may be eligible for a Utah State Funded Health Insurance Plan which is also known as HIPUtah.

How can I fill in the gaps in the HSA coverage?

Many people are hesitant to get an HSA plan because of the lack of coverage until you meet your deductible. There are many different ways to solve that issue and fill in the gaps with some supplemental plans. Whether it is with accident insurance, critical illness insurance or hospital indemnity plans, there are many ways to work around the issues and still save you money monthly over traditional plans.

When you combine that with the lower overall out of pocket expense than traditional plans as well as the tax savings, I believe that you will find these plans to fit your needs quite well.