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When it comes to choosing the “right” benefits, more than half of Americans are confused by health insurance, including HSAs. To complicate matters, almost one in seven Americans have absolutely no plan for their future financial and healthcare needs.
This combination of confusion and lack of planning has many downsides.
With a fundamental gap in education on how healthcare benefits work, many people end up choosing suboptimal benefit options. Many of those same people also continue to shy away from high-deductible health plans (HDHPs) and health savings accounts (HSAs) due to their perceived higher costs. And when you consider that the latest industry research projects an average retired couple may need more than $300,000 to cover basic healthcare expenses throughout retirement, it quickly becomes clear that these issues don’t just impact the short term. The wrong benefit choices can cause issues now and well into the future.
Add in confusion surrounding “preventive care”—what it is and how it’s covered—and it’s no surprise on average Americans with current healthcare coverage estimate they waste $111 per month on confusion over their health insurance plan.
Luckily, pairing an HSA with an HDHP can provide not only more affordable insurance premiums than traditional insurance options, but also multiple tax savings and investment opportunities that can help anyone work toward better financial wellness, both short and long term.
An HDHP/HSA combination provides:
If you want to learn more about why to choose an HDHP and HSA, check out our previous blog on that topic.
On top of many unique benefits, an HDHP/HSA combination also provides the ability to potentially save a substantial amount of money each year by taking advantage of anything that’s defined by the IRS as preventive care.
Preventive care, as its name implies, is care to help proactively prevent or detect healthcare issues before they become major problems—things like:
Earlier this year we covered important HSA updates for 2022. Part of the update highlighted the importance of preventive care and how it plays into healthcare costs—or more aptly how it can potentially save HDHP/HSA users sizeable amounts of money each year.
Preventive care is often misunderstood or overlooked in the broader healthcare equation. But it shouldn’t be. It’s critical that every healthcare consumer be informed and understand how preventive care fits into the healthcare puzzle—especially for those with or considering HDHP coverage paired with an HSA.
At the highest level, preventive care is covered immediately upfront at 100%. No deductible. No copay. As an HDHP/HSA user, you receive preventive care at no cost to you.
To provide a bit more context, for most healthcare expenses, your HDHP can’t provide benefits in a given year until you meet your deductible for that year. However, when the expense is for qualified preventive care, you’re able to bypass your deductible—meaning you receive immediate benefits for any care that falls under preventive care.
Taking advantage of preventive care as an HDHP/HSA user can equal substantial annual savings—especially for those managing chronic medical conditions that are covered under preventive care.
In 2019, the IRS made key expansions to the list of eligible preventive care for HSA participants, including coverage for many chronic conditions. This can have a huge impact for both current and prospective HSA accountholders.
Preventive care coverage for chronic conditions can be a potential game-changer for existing HSA users, as well as for anyone managing a chronic condition who may have previously shied away from considering switching to an HDHP with an HSA.
Preventive care is available for HDHP/HSA participants who manage conditions such as:
Also important to note, it’s not just medical care services that can be covered as preventive—it’s also items purchased like prescription drugs.
For more details on preventive care specific to HDHP/HSA users, as well as a complete list of diagnoses and qualified preventive care, view IRS Notice 2019-45.
Choosing an HDHP and opening an HSA can save you money from day one. But that choice can also pay dividends into the future.
There’s no better time than right now to plan for your long-term financial health. If you have an HDHP and an HSA, you can implement a saving and investing strategy to ensure you maximize your triple tax savings upfront year over year while simultaneously turning your HSA into an amazing long-term retirement planning vehicle.
With an HDHP and HSA, you get the best of both worlds. Because having an HSA is so much more than just a 12-month healthcare spending account.
From information on preventive care, to resources on eligible expenses, tools for planning contributions and everything in between, Bend has you covered.
When you choose Bend, you unlock access to the industry’s smartest and most user-friendly HSA platform—plus expert, responsive support and proactive education through every step of your HSA journey. We’re here to make HSAs easy for everyone and help you make the most of your health savings account.