HSA vs. FSA: Differences and How To Choose

November 21, 2020 11:50 newlambertagency

There’s no denying that healthcare can be costly. Even if you have insurance through your employer, you might consider taking advantage of one of the federal government programs that encourage saving for medical expenses not covered by insurance.

The most common type of accounts offered to employees is the Health Savings Account (HSA) and the Flexible Spending Account (FSA). The most significant difference between flexible spending accounts (FSA) and health savings accounts (HSA) is that an individual controls an HSA and allows contributions to roll over, while FSAs are less flexible and are owned by an employer.

Apart from this, there are several key differences between HSAs and FSAs.

Both HSAs and FSAs allow people with health insurance to set aside money for any healthcare costs referred to as “qualified medical expenses”. This includes deductibles, copayments and coinsurance, and monthly prescription costs.

You usually receive a debit card that you can use to pay for qualifying expenses. And both types of accounts have tax benefits as well.

Let’s discuss HSA vs. FSA – the difference

Although FSAs and HSAs both allow people to use pre-tax income for eligible medical expenses, there are considerable differences between HSAs and FSAs. Those differences include the qualifications, contributions limits, rules for rollovers and changing contribution amounts, and withdrawal penalties.

Qualification: The qualification for FSA must be set up by the employer while HAS is available only to people who have a high-deductible health plan, or HDHP.

Annual Contribution limits: The limit for FSA is up to $2,650/individual and up to $5,300/household. While for HSA, it’s up to $3,450/individual and up to $6,900/household.

Account Ownership: FSA is owned by the employer and lost with a job change, unless eligible for continuation through COBRA; while HSA is owned by individuals and carries over with employment changes.

Rollover Rules: In FSA, employees can roll over $500 into next year’s FSA, but it’s decided by the employer. In HSA, unused funds roll over every year.

Penalties for Withdrawing Funds: You may have to submit expenses to be reimbursed by FSA and depending on the employer, you may not have access to funds for nonmedical expenses. While in HSA, savings can be taken out of the account tax-free after age 65 and if used before 65, for nonmedical expenses, it is subject to a 20% penalty and must be declared on the income tax form.

By looking at the above HSA vs. FSA comparison, you can choose the one that best suits you.

Overall, the higher limits and contribution rollover of the health savings account make it a better choice if you can qualify. HSAs are more flexible than FSAs, allowing you to save for potential medical expenses and accumulate money over time.

ACA Health Insurance Plans vs. Healthcare Sharing Ministries

September 16, 2020 12:17 newlambertagency

The individuals who had previously been uninsurable due to poor health or pre-existing conditions received a gift in the name of the Patient Protection and Affordable Care Act in 2010. It brought with it a new era of healthcare for many Americans.

The law proposed a new structure of subsidies intended to help make healthcare more affordable, which presented an opportunity for many to get comprehensive health insurance coverage via their state health insurance portal or its federal counterpart.

The introduction of the ACA health insurance plans eliminated lifetime caps on coverage, meaning you could never get kicked off your plan for getting sick or “run out” of coverage and gave several Americans a chance to finally buy healthcare regardless of their health, employment situation, or income.

While ACA health plans kept made and kept several families happy, another healthcare solution has been gaining popularity over the years – healthcare sharing plans or healthcare sharing ministries. While they aren’t considered “health insurance,” healthcare sharing ministries can be used to reduce the out-of-pocket cost by families who want to share their healthcare expenses with other like-minded families.

Individuals and families who choose healthcare sharing ministries pay a monthly “sharing amount” (read premium) and depending on the program they choose, they can enjoy many of the same perks of traditional health insurance – like discounts on healthcare, limited out-of-pocket limits, and predictable monthly payments.

ACA Plans vs. Healthcare Sharing Ministries: What you should know

Like choosing any insurance, it’s important to weigh the pros and cons before you sign up. We have laid out the pros and cons of both the plans for you to help you make a decision.

Benefits: ACA plans

As already mentioned the most attractive feature of ACA health insurance plans is that there are no lifetime limits or caps. You can buy coverage regardless of your health and subsidies available for those who earn less than 400% of FPL.

Drawbacks: ACA plans

ACA plans are quite expensive and the plans may run on narrow networks. Also, the availability of plans depends on your state of residence.

Benefits: Healthcare sharing ministries

The most appealing feature of healthcare sharing plans is its cost. They’re less expensive and are more cost-efficient than ACA plans. The annual costs and deductibles are low and Families can share their costs with other like-minded families. Also, with this plan, you can avoid the penalty for not having health insurance.

Drawbacks: Healthcare sharing ministries

You need good health to qualify for this plan. It has a lifetime or annual caps on coverage and you cannot use a health savings account.

At the end of the day, the best way to find the right plan for yourself or your family is to look at your unique situation and determine which plan might offer better protection without costing too much or sacrificing your quality of care. After all, it’s your life!

Why Should You Choose a High Deductible Health Plan?

July 3, 2020 10:18 newlambertagency

For a growing number of Americans, it has become crucial to choose a deductible health plan. The trend started a decade ago and shows no signs of disappearing. At many firms, it’s the sole health insurance that’s offered for employees.

However, there are still a considerable amount of people who find themselves without employer-offered insurance benefits. Be it a student who’s in between jobs or self-employed individuals, people are needed to re-evaluate their Texas health insurance plans.

Thus, in such a case, one option to consider that will favour your budget is a high deductible health plan. A High-Deductible Health Plan (HDHP) is a health insurance plan with low premiums and high deductibles, compared to traditional health plans.

How does an HDHP work?

An HDHP involves the participant assuming all expenses until a deductible amount has been met. Any expenses that are greater than the deductible will be covered as part of the health plan. The insurer covers all medical expenses after the deductible has been met in full.

It can pay much lower monthly payments for medical coverage, with premiums being more reasonable it is possible to save money for the future in case a high deductible arises. Also, monthly medical costs decrease substantially with an HDHP.

HDHPs also offer some unique ideal for young people as they do not often deal with major illnesses. Health coverage is something they have just in case something happens unexpectedly. When the probability of a medical expense is low, an HDHP offers adequate coverage with lower costs in the long run.

People with HDHPs can also contribute to a Texas health savings account, which is a health savings account that allows you to contribute and withdraw money for qualified medical expenses without being taxed. So, if you combine your HDHP with an HSA, you can pay that deductible, plus other qualified medical expenses, using the money you set aside in your tax-free HSA.

The insurance benefits of an HDHP also give you some peace of mind as it covers for any catastrophic event and at the same time helps you save between 30 and 60% on medical costs.

You must consider the following when choosing a health plan that suits you:

  1. If you’re healthy and usually go to the doctor once a year, a lower monthly premium may be a good choice for you.
  2. If a chronic health condition means that you go often to your primary care provider (PCP) or specialists during the plan year, you must decide if savings from low premiums are greater than the cost of regular care or medication.

Carefully analyzing the ins and outs of high-deductible health insurance may help you find the coverage that’s right for you. In addition to saving you money, finding the right plan for you can help ensure that you’ll receive coverage for the health care you need when you need it.