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To contribute to a health savings account (HSA), participants must be enrolled in an HSA-eligible health plan. One of the requirements for an HSA-eligible health plan is that the health plan meets the IRS鈥� deductible limit. The phrase 鈥渉igh-deductible health plan鈥� is synonymous with these plans, but referring to them as such also overshadows the perks of being enrolled in one.听

鈥淐ongress 鈥� they鈥檙e very poor marketers,鈥� said , who is now the director of planning and business analysis at . 鈥淵ou would not call it a high-deductible health plan. You鈥檇 call it a low-premium plan. You鈥檇 call it an HSA-qualified plan. A tax-savings plan. You wouldn鈥檛 call it a high-deductible health plan.鈥�

Stuart joined us on our most recent episode of Benefits to break down some common myths about HDHPs/HSA-eligible health plans. Watch the episode below, or keep reading to learn three myths he outlined regarding these plans.

Myth #1: HSA deductibles are so high.
Fact: HSAs don鈥檛 have deductibles.听

If a participant鈥檚 deductibles are high, it鈥檚 not because of the HSA. Deductibles are tied to health plans, while HSAs are savings accounts paired with health plans to help participants save money.听

鈥淎n HSA is a financial account. It鈥檚 an account that helps you pay expenses,鈥� Stuart said. 鈥淭he medical plan may have a high deductible. 鈥� The HSA itself is helping you pay those expenses.鈥�

Even if you鈥檙e evaluating how high a health plan鈥檚 deductible is, the average deductible for a traditional health plan isn鈥檛 that much different than an HDHP鈥檚 IRS limit. In 2018, was $932 for single and $1,931 for family. The 2021 HDHP limits are $1,400 and $2,800, respectively.听

Myth #2: HSAs are for the rich
Fact: HSAs benefit everyone, and stats show that

Because an HSA requires plans with higher deductibles, there鈥檚 a perception that only wealthier individuals (who are more likely to afford these deductibles) benefit from HSAs. However, the tax savings and retirement-planning potential of an HSA can benefit anyone eligible.听

鈥淭here鈥檚 a lot of data in the industry that shows the average household income for a health FSA (flexible spending account) versus a health savings account is practically the same,鈥� Stuart said. 鈥淚t鈥檚 not income. It鈥檚 not the amount of medical claims. It鈥檚 not general health. The biggest factor in determining whether you have one or the other is simply what your employer offers.鈥�

Myth #3: HSAs are for the healthy
Fact: Even those with chronic conditions benefit from HSAs

The higher deductibles with HSA-eligible health plans also leave many thinking that these plans and their HSA partners are only for the healthy.听

HSAs can help cover a number of chronic health conditions, thanks in part to a guidance issued by the IRS and the U.S. Department of the Treasury in 2019. stated that, starting in 2020, certain expenses for care of chronic conditions are considered preventative for participants enrolled in HDHPs and HSAs. These additional expenses are eligible to be covered by insurance, even before participants reach their required HSA deductible.听

Stuart also points out that comparing the out-of-pocket maximum to what you would find with the Affordable Care Act (ACA) may surprise you.听

鈥淭he criticism early on was that they鈥檙e for the healthy and wealthy and wise,鈥� Stuart said. 鈥淥riginally, they probably were. But now that more employers are offering, less healthy people are going into it. Sometimes, even when you have a chronic condition, the out-of-pocket maximum on a health savings account program is actually lower than the affordable care act (ACA) maximum.鈥�

Would you like to get more insight from Stuart? or . Stuart has also written 鈥淗SAs: The Tax-Perfect Retirement Account,鈥� which is .听

Would you like to learn more about HSAs and retirement planning? Get your free white paper.听

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.听