If you currently pay for your individual medical insurance, a Connecticut HSA plan may reduce your rates and give you a tax deduction that puts more of your own money back in your pocket. Health Savings Accounts allow you to pay only for the coverage you use, and make contributions that can later be used for qualified medical, vision and dental costs. The Connecticut Marketplace Exchange (Access Health Ct) includes various plans that meet the needed criteria.
The lowest deductible allowed for an HSA-eligible plan is $1,250 for single contracts and $2,500 for family contracts. There is also a maximum out-of-pocket limit of $6,350 and $12,700 respectively. However, in most years, unless you are treated for serious medical conditions, you will not reach that maximum. That provides ammunition for selecting a higher deductible and depositing the savings into your side account.
Four of the most popular options for 2017 include:
ConnectCare Bronze CBI Compatible Plan 1
ConnectCare Bronze CBI Compatible Plan 2
Anthem BCBS Bronze Direct Access
HealthyCT Healthy Partner Basic Plus
Although policy details of these four options are somewhat similar, we have listed below some of the features of the HealthCT policy:
Deductible – $5,000 per person and $10,000 per family
Total Out-Of-Pocket Maximum – $6,350 per person and $12,700 per family
Annual Limit On Benefits Paid – None
Referral Needed To See Specialist? – No
Bariatric Surgery Coverage? – No
Hearing Aids? Yes
The main requirement to owning this type of coverage is to have a “High Deductible Health Plan,” which is essentially a catastrophic plan. It is offered by almost all CT carriers and since it is designed to cover larger expenses, rates are very low. Usually, the plan costs hundreds of dollars less per month than a typical policy that includes office visits and prescriptions.
But with your savings deposited (if you wish) into the side account, over time, you can potentially save thousands of dollars. These savings can be invested very conservatively (in a fixed account), or a more aggressive account that contains bonds, stocks, or a combination of both. Naturally, a fixed account will be much safer, and probably (over time) generate a smaller rate of return.
There are many advantages to owning an HSA. Your contributions are tax-deductible (assuming that you are paying and not an employer or another person) and they can stay in your “side account” at the end of each calendar year, regardless of whether you spent the money or not. You can also buy a long-term care policy with the funds inside the account since it qualifies as an approved purchase.
The “Side Account”
This “side account” is completely optional and not required by your insurer. Essentially, it is a unique savings account that pays a nominal amount of interest. However, any money you deposit into your account is a deduction, assuming the funds are spent on qualified vision, dental or medical expenses. And you do not have to itemize on your tax return to earn the deduction. You can also easily withdraw and/or deposit funds.
If you’re already spending your own money on these expenses, why not lower your taxes at the same time? It makes sound financial sense. You can choose which bank sets up your account. They may be a small monthly maintenance fee of a few dollars per month.
However, if you have an established relationship with that financial institution, the costs may be waived. And anybody listed on the actual HSA policy can deduct their expenses (yourself, your spouse and all dependents).
You use your account to reimburse the providers that treated you. Typically, you can use a debit card, write a check, or electronically transfer funds to the appropriate party. There will be many years that you simply don’t spend all of the money you deposited for that calendar year.
That’s perfectly fine since the money will remain in place until you need it the following year, or any subsequent year you have the account. If you want to withdraw the money, it’s always available. After all, it’s your money! You can also utilize your funds to purchase a Long-Term Care policy and tax-deduct the premium.
Additionally, you can change companies without having to change your bank account. For example, if you were covered by Anthem and then changed to ConnecticutCare the next Open Enrollment, your side account can remain the same. You may have to notify the bank of the new carrier, but no changes or alterations would be needed.
In Connecticut, there are various major carriers that offer competitive HSA options. Which company charges the lowest rate? That depends on may variables, including age, smoking status, zip code and the deductible of the policy. Your health does not impact the price you pay for coverage. Verifying that your providers are part of the company network is always an important consideration.
You can also easily purchase a catastrophic health plan in Connecticut without the HSA. Although there are four available Metal plans, a separate catastrophic Exchange option is available for persons under age 30 with limited income. Three office visits are provided with no out-of-pocket cost. If you are over age 30, you can qualify for a hardship exception that will allow you to purchase this low-cost policy. It will be less expensive than the Bronze policy, which is the cheapest Metal plan.
“Off-Exchange” policies are offered when you do not qualify for a federal subsidy. You can effectively bypass any state or federal .gov website since the process is quicker (and simplified). Rates and benefits are the same as “On-Exchange” plans. We are always available to explain the specific details.
Example Of Rates
But let’s use a simple example of a 45 year-old husband and wife with two children that live in Fairfield County. We will also assume that both parents are non-smokers, and of course, are legal residents of the US! The ages of the children are between 5 and 20. Once children reach age 21, premiums reduce. You may be shocked at these low monthly HSA rates:
$76 – BronzeDirect Access from Anthem.
$77 – Bronze CBI Compatible Plan 1 from ConnecticutCare.
$91 – Bronze CBI Compatible Plan 2 from ConnecticutCare.
There are additional plans that feature lower deductibles, but most consumers prefer a higher deductible, that allows you the flexibility of depositing the difference in premium in a separate account that will accumulate while reducing your taxes. You can view all of the top HSA options after completing the free quote section of this page.
Once Open Enrollment (OE) has ended, additional policies will be offered that can be easily purchased. These plans will include short-term, limited-benefit, and comprehensive policies from different insurers. Special “exceptions” are made throughout the year for persons that are terminated from existing plans, newborns, or anyone that moves to a different rating area. If you miss the OE period, you can continue to keep your accumulation account in force.
May 2014 – 2015 HSA contribution limits (and other updates) have been announced. The new limits are $3,350 for individual accounts and $6,650 for family accounts. The new minimum deductible requirements will also increase to $1,300 and $2,600 respectively. Tax-free accumulation of interest and dividends will continue along with tax-free distributions of qualified health, dental and vision expenses.