What is a Consumer Driven (CDHP) or High Deductible (HDHP) Health Plan ?
Just like the name suggests, an HDHP has a high deductible which you must satisfy before any benefits are paid by the insurance company. Participation in an HDHP will allow you to establish a Health Savings Account (HSA) where you can put away funds on a pre-tax basis to pay your portion of eligible medical expenses. A qualified HDHP must have all covered expenses, including prescription drugs (other than some preventative services), subject to the deductible.
What is a Health Savings Account (HSA) and how does it work with an HDHP?
A Health Savings Account (HSA) is a special account owned by an individual that is used to pay medical expenses. The account holder controls whether to contribute, how much, whether to pay expenses from the account or save for the future.
In order to contribute to an HSA an individual must be covered by a qualified High Deductible Health Plan (HDHP) and they can not be:
What is the maximum that can be contributed to an HSA in 2013?
What qualified expenses can be paid using HSA funds?
All expesnes must be documented with receipts. HSA distributions can be used to pay:
If HSA funds are used for anything other than qualified medical expenses they are subject to income tax and a 10% excise tax (prior to age 65).
Current and Long Term HSA Advantages
For more information on HSA’s go to government website www.treas.gov