By now, the term Health Savings Account (HSA) is probably something you’ve become familiar with. If not, an HSA is like a personal savings account, but the money saved is tax-free and used to pay healthcare expenses. Anyone can start an HSA and they generally link to individuals on high deductible health plans.
High deductible health plans usually require individuals to pay more out-of-pocket costs during the deductible period. Health savings accounts allow these same individuals to access untaxed money they have set aside for healthcare expenses. HSA’s are a way to help folks on high deductible health plans better manage their out-of-pocket costs.
Maximizing your HSA dollars is a valuable practice, since healthcare costs vary and are often unpredictable. A solid nest egg for your healthcare expenses can greatly help in times of need.
HSA Tips and how can I maximize my savings dollars
We spoke with HealthEquity, a leading provider of health savings accounts, about ways to maximize HSA dollars. They provided some simple tips you can easily implement while building your savings. Here’s what they said:
Use generic prescriptions
Generic prescriptions typically cost 30 – 80% less than their brand equivalent. We encourage you to consult your provider about generic prescription options. Your insurance plan may offer a prescription pricing tool for comparisons.
Urgent care vs. emergency room
A visit to the emergency room can cost three to seven times more than a visit to an urgent care facility that can provide the same treatment. You should consider only going to the emergency room in a potentially life threatening situation. Furthermore, an appointment made with your primary physician will be typically less expensive than a visit to the urgent care.
Max out your HSA contributions
Each year, the IRS gives you the chance to save up to a fixed amount on HSA contributions. To get the most out of this opportunity, you should contribute the maximum allowed – for 2016, the maximum contribution for single coverage is $3,350 and family coverage is $6,750.
HSA’s are never taxed at a federal income level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-free with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.
You can visit HealthEquity’s website to learn more about how to build your Health Savings Account.
Start saving your HSA dollars!
LowestMed’s prescription pricing tool can help you find out if your brand Rx has a generic option or not. Always search pharmacy prices for your medications, because costs vary by location and also by which discount source you use.
The discounts LowestMed provides can potentially help you lower prescription costs, in turn, helping build your savings.