In order to use a Health Savings Account (HSA), one of the requirements is that you have a High Deductible Health Plan (HDHP) in force. A HDHP is simply a special sort of medical insurance policy with some very particular components. Specifically, those components are: a) a higher annual deductible than most typical health plans; and b) a maximum limit on the sum of the annual deductible and out-of-pocket (OOP) medical expenses that you pay for covered medical expenses.
HDHP Limits
First of all, the limits for a HDHP are as shown in the following table (2009 figures):
| Coverage Type | Minimum Annual Deductible | Maximum Annual Deductible Plus OOP |
| Individual | $1,150 | $5,800 |
| Family | $2,300 | $11,600 |
**It should be noted that the Maximum Annual Deductible plus OOP only includes amounts paid within the defined “network” of providers authorized by the plan. Any expenses outside that network will not be considered within this Maximum Annual amount.
In addition, some family plans have a separate Individual deductible and Family deductible. When you meet the amount for the Individual deductible for one family member, you no longer have to meet the higher Family deductible for that year. If either the Family deductible or the Individual deductible are less than the minimums for that tax year, the plan does not qualify as a HDHP.
Colleague Mike Chamberlain had the following points to add:
Do not assume that just because your health plan was a high deductible that you are able to use an HSA.
If your plan had a $2000 deductible but paid for office visits and the deductible did not apply, you cannot have an HSA.
If you have a drug deductible that is not connected to the policy deductible it will not qualify either.
Most plans that do qualify state it in the name of the policy or boldly in the paperwork.
Thanks, Mike! — jb
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I can learn from you, you can learn from me - please leave your comments and links!Jim Blankenship, CFP®, EA, is an expert in personal retirement, IRAs, and tax issues, with more than 20 years of experience in the industry. . Read more from this author
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There is tremendous savings in the monthly premium when you switch from a traditional PPO health plan to a high deductible health plan. There are higher out of pocket costs involved. When you receive any medical bill not paid by your insurance, you should refer the bill to a medical bill negotiator before you pay it. For any bill over $200, you can send it to one of many fine medical bill negotiators (google it!). They review and negotiate the bill on your behalf. They keep a portion of the savings, and there is no fee if there is no savings.
Note: Italicized portion edited by jb to remove blatant solicitation
[...] medical expenses. The HSA must be used in conjunction with a High Deductible Health Plan (HDHP). The HSA can be established using a qualified trustee or custodian that is separate from the [...]
Ive been doing alot of reading about these high deductible health plan lately as Im about to obtain one through my job. I admit, at first it seems like alot to pay for, but there is a chance for some big savings as well. These plans are usually accomodated by a HSA, HRA, or FSA, into which you put a certain amout pretax, and said money can be used to pay for medical expenses, or go towards your deductible. It saves the company money, which in the long run, lets you keep your job, which is nice in this economy. And even though you have to pay everything up to your agreed deductible amount, everything after is covered, with perameters of your plan. Another bonus is that, if you use the Doctor infrequently, the money in HSA, is your money,and it accumulates. If you leave the job, that money is still yours. There are pros and cons to every situation. I have posted a couple links I found to be very useful. I hope they help in your search for info.
http://www.youtube.com/highdeductiblehealth
http://highdeductiblehealthplan.blogspot.com/
Thanks for the links, @Jordan – looks like some useful information.
jb