High Deductible Health Plans & Health Savings Accounts

Participation in high-deductible health-care plans, or HDHPs is growing rapidly. According to Morningstar’s director of personal finance, Christine Benz, “as health-care costs and insurance premiums have skyrocketed, HDHPs,
combined with health-savings accounts, provide employers with a way to
offload some of the burden to their employees. For self-employed
individuals shouldering their own health-care costs, high-deductible
plans might be the most (or only) affordable option.” HDHPs charge lower premiums than more comprehensive insurance plans.  Participants can stash money in health-savings accounts (HSAs) to cover out-of-pocket costs of HDHPs. “Contributions
to HSAs aren’t subject to tax, investment earnings on the assets in the
account aren’t taxed from year to year, and withdrawals are tax-free,
provided they’re used on qualified health-care expenditures.”  You can only contribute to an HSA if an HDHP is your primary insurance. “In 2012, a high-deductible plan is one with a deductible of at least
$1,200 for individuals and $2,400 for families, with a maximum
out-of-pocket expense of $6,050 for individuals and $12,100 for
families.” If you have a HDHP, check out your HSA options, focusing on fees and investment options. High fees and poor investment options (such as a money fund that pays virtually no interest) may exceed the tax advantages.  Learn more about HDHPs and HSAs at:
http://news.morningstar.com/articlenet/article.aspx?id=570460