Can I “purchase” a Healthcare Savings Account without standard insurance coverage?
Megan M asked:
My family currently already has health insurance coverage but the company does not offer HSA’s. My husband owns his own incorporated company and wants to offer ONLY an HSA option and NO healthcare insurance. Is this possible? Basically, as a small business, can we purchase just an HSA without having to also buy healthcare insurance too?
Roslyn Knieper
My family currently already has health insurance coverage but the company does not offer HSA’s. My husband owns his own incorporated company and wants to offer ONLY an HSA option and NO healthcare insurance. Is this possible? Basically, as a small business, can we purchase just an HSA without having to also buy healthcare insurance too?
Roslyn Knieper
HSA’s are payroll deduction plans that allow an employee to setup a savings account with pretax dollars. However they are only allowed in conjunction with a high deductible health insurance plan. That is why the government allows you to take the deduction pretax, so you can save up for the high expense of the deductible.
There are “cafeteria” style plans that allow employees to set aside amounts pretax but the employee must use the amounts set aside each year or loose ownership of the savings.
You could talk to a health benefits provider in your area to get other options and to make sure I didn’t forget any key points.
The short answer is, “no.”
An HSA account must be coupled with an HSA qualified high-deductible policy.
Opening an HSA account is not mandatory when purchasing an HSA policy though. Your husband could purchase a high-deductible HSA qualified policy, (either individual policies or a group policy,) thus giving your family and any employees the option of contributing to the HSA account. It is likely that individual policies will be less expensive, though they are medically underwritten.
No. An HSA can only be set up in conjunction with a Qualified High Deductible Health Plan.
Also, please be aware that your family is not eligible for an HSA (even if your husband offered one through his company) due to the health insurance coverage you already have.
(From the FAQs on the US Treasury website regarding HSAs
“Who is eligible for a Health Savings Account?
To be eligible for a Health Savings Account, an individual must be covered by a HSA-qualified High Deductible Health Plan (HDHP) and must not be covered by other health insurance that is not an HDHP. “)
As you have heard above, the answer is no, you need to have the high deductable insurance plan with the HSA. Most carriers these days are coupeling the two together as it is, so there really is no way around it.
With regards to the individule in the HR department of their company, HSAs are for the most part no longer use it or lose it plans… even the cafeteria plans. This has been changed recantly in order to make HSAs more usefull to the employees since these plans drop the cost of insurance by thousands of dollars per year for the individuals and the employeers who are paying the premiums for the insurance.