New HSA Contribution Limits For 2010

What is your deductible if you are not covered by an insurance plan? Think about it...it is infinite. You need to consider a catastrophic health plan that you can afford. A high deductible health plan has a much lower deductible than "infinite".
The Internal Revenue Service has announced the maximum contributions that people insured under a Health Savings Account (HSA) plan can make. The maximum amounts will increase, and the minimum deductible amounts will also increase.

The maximum contribution that can be made to an HSA (the Health Savings Account that you have at a bank) in 2010 for insured individuals with single coverage will be $3,050, up from $3,000 in 2009. For those who have insured under a family plan, the maximum contribution will rise to $6,150 from $5,950.

New Maximum Deductible Limits
Many people will be happy to hear that the maximum deductibles will rise to $5,950 for single insured individuals up from $5,800 this year. For a family, the maximum deductible will be $11,900 up from $11,600 in 2009.

New Minimum Deductible Limits
The minimum deductible of the high deductible health plan will increase to $1,200 for single coverage and $2,400 for family coverage. The current 2009 minimum deductibles are $1,150 for single coverage, and $2,300 for a family plan.

How Health Savings Account Type Plans Work
Without a doubt, high deductible health plan, linked with the Health Savings Account, is the least expensive way to purchase major medical coverage. The savings are in the order of almost 50%.

How can this be?
First, the high deductible health plan is less expensive, but secondly, you get to contribute money to your own health savings account. The health savings account is a special type of account you can open up at your local bank. It is very similar to an IRA with which you may be familiar. The contribution to your HSA or health savings account is not taxed. It is exempt from Federal Income Tax, State Income Tax, and FICA. Your money goes twice as far when it is not taxed.

Spend Your Tax Free Savings Money
You can use your savings money to pay your dentist, your acupuncturist, your chiropractor, your eye doctor, your doctor, your prescription drugs and over-the-counter cough medicines. Your savings account money can be spent on medically related expenses.

Here is an example
How does the HSA type plan work? Let's take an example. Perhaps you wake up one morning and you have a fever and a pain in your right side. You go to the doctor. The doctor checks your symptoms and he decides to send you to the hospital. He suspects that you have appendicitis. You have your appendix removed.

Your Out-Of-Pocket Costs
What are your out-of-pocket costs? (We will assume that this happens in 2010.Doctors have negotiated a consultation rate with your insurance company. He is required to charge no more than that agreed amount. Usually, this is $65 to $70 for the visit. You write him a check which draws on your HSA account that you have opened at your local bank, and pay him.

You go to the hospital and the admit you. The operation costs $30,000. You are responsible for your deductible, which in this scenario is the maximum amount of $5,950. This may sound like a very high deductible to have to pay, but it is actually in line with what you would have had to pay if you had a traditional copay plan. Once you have paid your $5,950, the insurance company will cover 100% of any additional insurance claims you have for the entire year.

Take The Time To Learn
HSA type plans may sound confusing at first, but trust me, you need to investigate them. Yes you can save up to 50% on your health insurance.