What Is the Difference Between an HSA & a Hdhp?

Health Savings Accounts (HSAs) are tax-free savings accounts for members of high-deductible health plans (HDHPs).

Coverage

• HDHPs have high deductibles which must be met before any benefits are paid (with varied exceptions for preventive care, depending on the plan.). HSA funds may be used for qualified medical expenses, including medication, doctor visits and hospital stays.

Conditions

• You can have an HDHP without an HSA. However, you can have an HSA without an HDHP only if you opened an HSA during a previous enrollment in an HDHP.

Cost

• As of 2010, the minimum annual deductible for HDHPs is $1,200 for an individual and $2,400 for a family, though higher deductibles are available. HSAs may have an account maintenance fee and may also earn interest, which is tax-free. Contributions and withdrawals for qualified medical expenses are not taxed.

Maximum Contributions

• AS of 2010, you may contribute up to $3,050 to an individual HSA, or $6,150 to a family HSA. The maximum HDHP annual out-of-pocket expenses are $5,950 for an individual and $11,900 for a family.

Availability

• You can enroll in an HDHP through a health insurance company. You can open an HSA at many banks, investment firms, and credit unions.