Overview of a High Deductible Health Plan with an HSA?

Health insurance plans that require insured patients to pay significant sums before insurance kicks in are known as high deductible health insurance plans. Under federal tax law, persons with high deductible plans can open special tax-favored Health Savings Accounts, under which a person can divert pretax income to save for medical care. According the IRS, a high deductible plan must feature higher deductibles than typical plans, and must cap a patient's out-of-pocket costs. The plans may pay for some routine care and other programs defined by the IRS, such as smoking cessation, without impacting the deductible, but many do not.
Because Health Savings Accounts offer special tax advantages, the IRS restricts how patients can use the money. Under the regulations, money from HSAs can only be used for medical expenses that are tax deductible, with an important distinction. Under federal tax law, medical expenses are only deductible if they exceed 7.5 percent of a person's adjusted gross income. This is not the case for HSA expenses. Expenses that qualify for the deduction are listed in IRS Publication 502, Medical and Dental Expenses. Money not spent on qualified medical expenses is subject to taxes and penalties.
High deductible plans offer some benefits. For young employees, the plans offer the chance to accumulate a significant sum of money that can be used for health care costs in later years. They have also allowed employers to avoid layoffs or more drastic benefit cuts in recessions. Some plans offer users the ability to invest some HSA money in the stock market and mutual funds. Policy-makers also believe that high deductible plans will curb the rise in health spending. Under this belief, patients will choose health care providers and utilization more carefully when large sums are coming out of their own pockets.  http://healthcareatm.com/