The HSA-HDHP has lower premiums and allows you to set aside tax-free funds in a Health Savings Account (HSA). You may use this account to pay for current or future qualified medical expenses, including deductibles, coinsurance, and prescriptions, or certain retiree health expenses and premiums. As the name indicates, the plan comes with a higher deductible. But the advantages are worth a closer look:
Low premiums. Because the plan has a high deductible, the monthly premiums are low.
Tax-free contributions. Money deposited into your HSA through pretax payroll deductions reduces your taxable income further.
Tax-free earnings. Earn interest on your HSA, similar to a savings or investment account. If you maintain a $2,000 minimum deposit account balance, you can invest future contributions in one or more of six Wells Fargo mutual funds. You can grow your earnings tax free.
Tax-free distributions. Money used from your HSA to pay for qualified medical expenses is not taxed.
Flexibility and control. Grow, save, and carry over your balance from year to year. Your account is portable and there is no annual "lose it or use it" provision.
Portability. You can take it with you even if you change health plans or leave Wells Fargo.
Note: Currently, Alabama, California, New Jersey, and Wisconsin impose state income taxes on the HSA.
