Learn more about the benefits of different consumer directed health plans in Madison, Wisconsin.

The Benefits of Consumer Directed Health Plans In Wisconsin

Consumer directed health plans are designed to provide a greater level of control over health care dollars. These plans are commonly identified by the type of savings accounts associated with them –

  • Health Savings Accounts (HSA)
  • Health Reimbursement Arrangements (HRA)
  • Flexible Spending Accounts (FSA)

Consumer directed health plans focus on planning for health spending. This may help minimize the tax impact and allows for careful tracking of health care spending.

 

Three Types of Consumer Directed Health Plans and Their Benefits

  1. High Deductible Health Plan + Health Savings Account (HDHP & HSA)

    HDHPs with HSAs are becoming a popular type of consumer directed health plan in Wisconsin. HDHPs offer health insurance coverage featuring a high deductible. These HDHP plans are linked to HSA accounts. With an HSA, you can save money by using pre-taxed dollars to help pay your deductible. You can also pay other qualified out-of-pocket costs with money from your HSA. Learn more about high deductible health plans and determine whether one may be the right choice for you.


    Benefits of HSAs –

    • You can use the funds in the account to pay for your deductible and qualified medical expenses (health care services, prescriptions)
    • You can use HSA funds to pay medical costs for people listed as a spouse or dependent on your tax return (for qualified expenses)
    • The funds you deposit in a HSA aren’t subject to federal income tax at the time of deposit
    • You may use the funds for health insurance premiums if they are for
      • Long-term care insurance premiums
      • COBRA
      • Health insurance premiums if you are unemployed
      • Medicare or Medigap premiums if you are over 65
    • You can earn tax-free interest on your HSA account
    • You can accumulate funds from year to year (unlike FSA plans where you have to spend the full amount each year or potentially lose what's left over)
    • Additional tax-deductible contributions can be made to your HSA by you or a family member, as long as they do not exceed the legal limit
    • You are the owner of your HSA and can continue to use the money in your account for qualified medical expenses
    • You can withdraw money from your HSA for things other than qualified medical expenses, however you will be required to pay income tax and a penalty on the amount withdrawn 

  2. Health Reimbursement Arrangements (HRAs)

    HRA accounts are consumer directed health plans that are set up by your employer. Deposits to the account are made by your employer only. HRAs are designed to reimburse your qualified medical expenses.


    Benefits of HRAs –

    • Unlike an HSA, you don't have to be enrolled in a high deductible health plan to be eligible
    • The funds you deposit in an HRA aren’t subject to federal income tax at the time of deposit
    • Reimbursements may be made to spouses and dependents of the employee
    • You may pay some premiums with the HRA, including
      • Health insurance premiums
      • Long term care insurance premiums
      • Amounts that are not covered under another health plan
    • You can accumulate funds from year to year
    • There is no maximum on the amount of money your employer can contribute to your HRA
    • Your HRA may be used with some other health benefits provided by your employer

  3. Flexible Spending Arrangements (FSAs)
  4. FSAs are another type of consumer directed health plan your employer sets up for you. With FSAs, the money contributed to your account must be used by the end of the year or you may lose it.


    Benefits of FSAs –

    • You don't have to be enrolled in a high deductible health plan to be eligible for an FSA
    • Both you and your employer can contribute
    • No employment or federal income taxes are deducted from deposits
    • Designed to reimburse your qualified medical expenses within a calendar year
    • You must spend the amount you save each year except –
      • Some plans allow a grace period of up to 2 ½ months
      • Some plans allow a $500 carry-over
    • Your FSA may be used with some other employer-provided health benefits

 

Think a consumer directed health plan may be the right choice for you? Unity offers several individual HSA plans in Wisconsin. Get a quote for an HSA health plan today or call us Monday through Friday from 7 a.m. to 7 p.m. at 608.644.3430.