Question

Explain high-deductible health plans (HDHP) and healthcare savings accounts (HSA).  What are the 2018 deductibles and maximums?  

Answer 1

Answer : 1. High Deductible Health Plan (HDHP)

A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes.

The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family.

2 Health Savings Account (HSA)

A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you can lower your overall health care costs.

For 2018, the contribution limits rose to $3,450 for an individual and $6,850 for a family. If you’re 55 or older, you can contribute an extra $1,000 a year. An HSA may earn interest, which is not taxable. Some health insurance companies offer HSAs for their high deductible plans. You can also open an HSA through some banks and other financial institutions.