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Montgomery & Associates Georgia's Health Insurance Specialists Individuals & Families Groups & Small Business Health Savings Accounts Get Quotes

Michael Montgomery, Insurance Specialist Would you like the security of 100% co-insurance? Many HSA plans provide for 100% co-insurance for qualified expenses after the deductible is met. This saves you money. See the following examples:

Do you want to benefit from lower premiums? Many people use only a small fraction of the insurance they are paying for. The best way to lower premiums is to accept a higher deductible. With an HSA you get lower premiums and can save some or all of the savings in a medical savings account. The few times each year you need to visit the doctor for routine visits the money you saved is ready to be spent. Read on for more on HSA's.

HSA Basics

Health Savings Accounts are a new option for health insurance and they have two parts. The first part is a health insurance policy that covers large hospital bills. The second part of the Health Savings Account is an investment account or retirement account from which you can withdraw money tax-free for medical care. Otherwise, the money accumulates with tax-free interest until retirement, when you can withdraw for any purpose and pay normal income taxes.


Health Savings Accounts (HSAs) give workers the opportunity to save tax-free for routine expenses, the security of insurance against major illness, and the freedom of knowing you can take your account with you whenever you change jobs.

In late 2003, legislation was signed creating tax-free Health Savings Accounts - a new option in coverage which will give millions of Americans access to affordable health care. These accounts can reduce health insurance premiums for families by thousands of dollars annually.

How HSAs Work

You can set up an HSA with the purchase of a low-cost, high-deductible insurance policy to cover major medical expenses.

The money you contribute to your HSA is tax-deductible. Contributions can be made each year up to the amount of the major medical policy's annual deductible, with a cap of $2,600 for individuals and $5,150 for families. Individuals over age 55 can make extra contributions to their accounts ($500 in 2004, increasing to $1000 by 2009) and still enjoy the same tax advantages.

Money from the HSA can be withdrawn tax-free when used to pay routine medical bills, like doctor visits or medicines.

The money can also be saved in the account and carried over into the next year, earning interest tax-free. You own and control the HSA and keep it whether you change jobs or move.

You can spend money from your HSA on the doctor or pharmacy of your choice. You and your doctor determine which medical goods and services you need, without interference from an insurance company. With HSAs, less of your money goes to insurance companies and more money stays with you and your family.

Can you benefit from saving money instead of paying taxes?

Money from the Health Savings Account can be used to pay medical bills below the insurance policy's deductible. It can also be used to pay for expenses that insurance does not cover, like contact lenses, over-the-counter medicines, or braces for your children.

Most individuals and families have few medical bills during some years and higher expenses in others. During years when your health care spending is low, you can leave the money in your HSA - where it will earn tax-free interest and be available in years when unexpected medical expenses arise.

The major medical insurance policy protects you against big medical expenses, like hospital stays, and provides peace of mind by limiting total out-of-pocket medical costs in the event of serious illness.

Premiums for these plans are substantially less than for standard health insurance coverage, and once you meet the deductible, the insurance covers most or all of the medical expenses. Families and individuals faced with a significant accident or illness have enough to worry about without the fear of financial devastation. With an HSA and a major medical insurance policy, you can focus completely on fighting the illness, knowing there is a manageable limit to your share of the cost of treatment.

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