What are the main differences between a an individual/family PPO health insurance and an HSA (Health Savings Account) policy?

A PPO policy is what most people are used to in that they typically offer co pays for both doctor visits and prescriptions. An HSA policy, however, will typically not have co pays for doctor visits, but will have co pays for prescriptions after you’ve hit the major medical deductible.

Both HSAs and PPOs within the same insurance carrier typically use the same network of doctors and hospitals. If you stay within that network for all medical services, you will receive the PPO contracted rate on any such all services that are not already covered by the co pay. If you go out of network for any medical services, you typically will not receive any pricing benefit for being a member of the PPO of your Texas health insurance carrier and the monies you spend will count toward your out of network deductible.

While both HSAs and PPOs are 100% tax deductible for the self employed, an HSA can also give you an extra tax advantage in the form of an income tax deduction while a PPO will not. This extra advantage is available to you whether you are self-employed or not.

In 2012, a family can contribute up to $6,150 (or any amount less) per calendar year and an individual can contribute up to $3,100 (or any amount less) per calendar year to an HSA account. If you are over the age of 55, you may contribute and extra $1,000 per calendar year as a catch up contribution.

These accounts can be opened at any major bank (Chase, Wells Fargo, Bank of America, etc.) or also online at www.hsabank.com. Most banks will pay you a typical interest rate on any balances and you also have the advantage of investing the funds into the bank managed mutual funds. HSAbank.com gives you the option an interest rate or to invest the balance in any mutual fund, stock, etc as your account can be linked to a TD Ameritrade account which gives you more flexibility.

The question remains, which is the better option for me? In most cases, if you take the maximum tax deduction each year and make the maximum contribution, HSAs are almost always a better deal than a PPO.

For help on purchasing a Texas based HSA or PPO health insurance policy (along with opening the HSA account), please contact www.selectedbenefits.com or call us at 866.270.6209.