High-Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs) are typically great options for healthy, single adults looking to save money. However, this option can also be useful for those who can afford to pay medical bills up to their out-of-pocket maximum (OOPM) and can contribute the maximum amount to their HSAs annually.
Example
For example, the Smiths are a highly compensated married couple with one dependent who can cover the full amount of any medical expense up to their OOPM. They are considering changing plans from their traditional plan to an HDHP with an HSA, where they are hoping to contribute the maximum allowed amount.
The Smiths will likely save more money by enrolling in an HDHP with an HSA rather than with a traditional plan, as long as they do not need any major surgeries or have any emergencies.
In 2026, the Smiths’ tax-free investment would be $8,750, which can be used to set themselves up for retirement, as all HSA contributions can be rolled over year to year.
Benefits of an HDHP with HSA
- Unlike flexible spending accounts (FSAs), unused HSA funds roll over year to year and remain with the employee, regardless of the employer.
- HSAs offer significant tax benefits, regardless of age or health status, including pre-tax contributions, tax-free investment growth, and tax-free withdrawals for qualified medical expenses.
- HSA funds can be used for Medicare premiums (after age 65), long-term care expenses, and retirement healthcare costs, making HSAs a great option for both mid-career and older employees focused on financial planning.
- HDHPs also encourage employees to become more informed healthcare consumers by encouraging them to compare provider costs, partake in preventive care (completely covered by plan), ask about generic medications, and leverage telemedicine and urgent care options appropriately.
Conclusion
Choosing the plan that is best for you and your family’s anticipated medical needs is crucial for ensuring you have proper coverage. For more information regarding HDHPs and HSAs, reach out to your dedicated Creative Benefits, Inc. team.