Understanding High Deductible Plans on an HSA Account

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What an HSA high deductible plan is

High deductible plans on an HSA account refer to health insurance plans that require individuals to pay a higher amount of out-of-pocket expenses before the insurance coverage kicks in. These plans are often paired with a Health Savings Account (HSA), which allows individuals to save money tax-free for qualified medical expenses.

With a high deductible plan on an HSA account, individuals benefit from lower monthly premiums compared to traditional health insurance plans. However, they are responsible for covering a higher deductible amount before the insurance provider starts to share the costs.

IRS deductible thresholds for 2020

Typically, a high deductible plan on an HSA account is defined by the Internal Revenue Service (IRS) as a plan with a deductible of at least $1,400 for an individual or $2,800 for a family in 2020.

How HSAs reduce taxes and costs

High deductible plans on an HSA account offer a unique approach to managing your healthcare costs by prioritizing savings before spending. These plans allow you to contribute pre-tax dollars into your Health Savings Account, reducing your taxable income while preparing for future medical expenses.