Just about every health insurance plan today is going to make you pay for some of your cost out of pocket. If you choose a plan that is HSA eligible, you can pay those costs out of a savings account that is tax deductible. Essentially, you are getting a discount on your out of pocket health care costs that is equal to your marginal federal income tax rate.
But not every plan is HSA eligible.
What makes a plan HSA eligible?
There are some minimum requirements. First, the plan has to have a minimum deductible. For individuals it is $1,200 a year, $2,400 for families. These used to be considered high deductibles at one point, but today insurance costs are climbing so fast these levels of deductibles are more commonplace.
Also, in order for a health plan to be HSA eligible, the total out of pocket expenses must be under $5,950 for individuals and $11,900 for families. Your monthly premium DOES NOT count towards your total out of pocket expenses.
Most people overlook the total out of pocket costs, and focus only on the monthly premium. Many plans with coinsurance will have much higher out of pocket costs. HSA plans are reasonable.
When you choose a higher deductible plan your premiums usually go down quite significantly. Sometimes the lower premium, and tax deductions are enough to offset the higher deductible. And if you stay healthy all year, the lower premium is a nice bonus.
How Do I Find HSA Eligible Plans?
If you are working with a broker one on one, tell them that is what you want to see. Some unethical brokers might try to steer you towards a higher commission plan, but just be firm and tell them you only want to look at HSA compatible plans. If you are shopping for insurance online, then most sites will have a search function that allows you to sort by insurance plans that can be paired with an HSA.