How to Pay Health Insurance With Pre-Tax Dollars in Ohio
Setting aside money in a health savings account allows you to pay for health coverage on a pre-tax basis. To qualify, you must enroll in a high deductible health insurance plan, sometimes referred to as catastrophic coverage. HSAs are available through major health insurance companies in Ohio. Some Ohio health insurance companies that offer HDHP plans include Anthem's Lumenos HSA Plans, Aetna's PPO High Deductible Plan and Humana's Autograph Total Plan. You can invest the funds in stocks, bonds and mutual funds but can only withdraw money for health care expenses.
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Instructions
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Contact several HDHPs to receive quotes to compare prices. Because these plans require high deductibles, the premium is substantially less than traditional copay plans. Unfortunately, you paying for health care coverage on your own is more expensive compared to going through your employer. An individual HDHP must enroll in a plan with a deductible of at least $1,200. Under an individual plan, annual out-of-pocket expense including deductible, co-insurance and co-pays may not exceed $5,959. Family coverage deductible minimum is $2,400 with a maximum out-of-pocket expense of $11,900.
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Enroll in the HDHP of your choice. After enrolling in an HDHP, you must sign up for a HSA with an approved financial company such as a bank, credit union or insurance company.
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Make deposits into your HSA. The IRS established contribution limits for HSAs. In 2011, individuals may contribute a maximum of $3,050 into an HSA. Familes may contribute a maximum of $6,150 for the tax year.
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Tips & Warnings
If your employer offers health insurance coverage, make an election to enroll in your employer's health care plan. You receive a subsidy on premiums by enrolling in your company's health care plan. In addition, your employer deducts health care premiums from your paycheck on a pre-tax basis. This reduces your taxable income per pay period.
The IRS limits purchase of drugs from a HSA to prescription medications only. You can no longer use tax free HSA deposits to purchase over-the-counter medications. Secondly, the IRS imposes a 20-percent penalty for using HSA funds for non-qualifying expenses. In addition to the penalty, the non-approved funds are subject to income taxes.
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