Page 62 - The Informed Fed--Hearn Wealth Management

great choice for you. High-Deductible Health Plan can be expected to
have lower premiums with higher deductibles. For any of you who

remember what they used to call catastrophic insurance where you only
had coverage for a major health event, but you could afford to pay for
other day-to-day healthcare expenses; that is essentially what the High-

Deductible Health Plan does.
HSA Health Savings Account. The High-Deductible Health

Plan comes with a Health Savings Account. The HSA associated with
the High-Deductible Health Plan is different from the Flexible Savings
Account (FSA). The biggest complaint about the FSA is that it is a use-

it-or-lose-it option. The HSA funds roll over from one year to the next,
regardless of whether you stay in a High-Deductible Health Plan or not.
Another difference is that the HSA funds earn tax-free interest where

FSA funds do not. ll cover more on FSAs later in this chapter. The
funds are completely portable, meaning that if you retire or leave federal
service, the funds are yours to take with you and spend on healthcare

expenses in the future. The custodian of the HSA will provide you with
a debit card which you can use to pay deductibles, co-pays and other

health-related expenses. You can continue in a High-Deductible Health
Plan in retirement until you reach age 65 and become eligible for
Medicare. The funds you accumulate in your HSA during your working

years can be utilized for healthcare expenses in retirement, including
premiums on your federal employee health benefits after age 65.

The HSA acts as a healthcare IRA. The funds are even inheritable by
your heirs. How do you get funds into your HSA? There are two ways.
The first is to contribute funds each month. This can come directly out
of your checking account to go, pre-tax, into the HSA. The second way

is that the insurer gives back a portion of the premium you pay directly
into the HSA. You receive a rebate from the premiums you pay, actually

reducing your overall health care costs. You must be in a High-
Deductible Health plan to have an HSA. The only exclusions from
participating in the HSA are:

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