HSA Insurance Vs. Traditional

Using a health savings account (HSA) to pay for medical insurance provides an advantage over buying traditional medical insurance by allowing you to use tax-free dollars, but rules and restrictions apply. You may prefer using a traditional insurance plan in some cases.

HSA for High Deductible Plans Only

• HSA accounts can only be used to pay for a High Deductible Health Plan (HDHP). Not all health insurance plans are eligible. Consumer choices for traditional health insurance plans are not limited to HDHP-only plans.

Premium Cost

• The premium amount for an HDHP insurance plan is usually lower than the premium paid for a traditional health insurance plan.

Deductible Cost

• As the name implies, an HDHP insurance plan has a higher deductible amount for the consumer than traditional insurance. This means that you normally pay more for general out-of-pocket costs versus traditional insurance co-payment amounts.

Catastrophic Coverage

• A potential advantage of HSA accounts is that, normally, 100 percent of expenses are paid after you have paid the total deductible amount. This will benefit you most in a catastrophic medial situation. With a traditional medical plan you may only be reimbursed a percentage of medical costs, even in a catastrophic situation.

Preventive Care

• Because HSA plans normally require consumers to pay out of pocket for routine medical expenses, some critics contend that these accounts reduce the overall use of medical services for preventive care, particularly among lower income consumers.