QUESTION

I've been told I should look for a Health Savings Account (HSA) compatible plan on the health insurance Marketplace. What is an HSA-compatible plan and what are the pros and cons of enrolling in one?

Individuals with coverage | Individual and Marketplace Health Coverage
ANSWER

An HSA-compatible plan is a “High Deductible Health Plan” (HDHP) with an annual deductible that is not less than $1,350 for self-only coverage and $2,700 for family coverage in 2018. For 2018, maximum out-of-pocket expenditures cannot be more than $6,650 for an individual or $13,300 for a family. However with family coverage, current rules require that the maximum out-of-pocket expenditure for any individual family member cannot be more than $6,650.

The benefit of a HDHP is lower monthly premiums, but the disadvantage is that in the event that you become ill, this high deductible means that your health insurance does not kick in until you have paid that amount out-of-pocket. High deductible plans can be beneficial if you don’t anticipate incurring health expenditures regularly and you have sufficient disposable income to fund the HSA or pay for health care services out-of-pocket until you meet your plan’s deductible. High deductible plans can be risky if you have not set money aside and experience an unexpected need for health care services. (IRS, Rev. Proc. 2017-37).

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