Hello! I am new here, but with all the questions I have it should become a second home! My husband has taken a job offer that does not include insurance (though the employer raised his salary to effectively cover premiums on a self insured plan). We have your typical group insurance and are looking into cobra, and the cost of comparable plans to the one we have.

What we are looking at is a copay driven plan with a 1000 dollar deductable per person 3000 max out of pocket for our family of four. It looks like maybe we can do an HSA, but I wanted to ask you all if I am even correct! I don't know if it qualifies as a "catastrophic" plan. There will certainly not be the 10,000 deductable.

Plans that qualify for HSA's usually have some type of marketing material that identifies them as such. For 2007 the deductibles must be at least $1,100 per individual and $2,200 for families. Max out of pockets must be $5,500 individual, $11,000 family.

Keep in mind that some plans have corridor deductibles and some do not, which may or may not be an issue for you. Corridor is for HSA plans with 2 or more members. If you do not have a corridor deductible plan, you may have more oop than you expect. For example, using the 2007 numbers above, and a non-corridor deductible, let's say you are the only person (out of 4) who incurs a claim. The claim is for $15,000. Your oop would be $11,000. The contracts were drawn up on the old tax laws that required it to be this way. Over the past 2 or so years, Corridor deductibles (other names are used) allowed for the this situation to be changed.

Good luck.

I guess I need to ask about that. I told one person that gave me quotes that I wanted similar to what I have now, and he told me max out of pocket is 3000 for the plan he quoted me.

Is there any way to pay the premium on that tax free?

Generally speaking, if not covered by an employer's plan, you can only deduct the amount that's over 7.5% of AGI or, if you qualify as self-employed and had a net profit, the whole amount. See IRS Publication 502: http://www.irs.gov/pub/irs-pdf/p502.pdf

The $3,000 max oop quoted you is ok for both the individual and the family because it is below the $5,500 for individual and $11,000 for family. Since it has a lower oop, it will be more expensive.

As for your 2nd question, pay the premium on a tax free basis, I am not an accountant, nor did I sleep in a Holiday Inn Express last night, but I would venture a guess as no. You should consult your tax advisor. My guess is that you are asking this as an individual, so the answer is 99% no, short of 7.5 of agi. But there are some exceptions, such as if you are collecting unemployment (you can use your HSA funds to pay the premium) of if you are self-employed.

Good luck

Word of caution: If you are shopping for coverage in the individual market, don't get caught up in the question of whether or not the plan qualifies you for an HSA. Your first obligation to yourself and your family is to get the best coverage you can afford. Pay particular attention to any lifetime maximums and other exclusions or limitations that some less-than-forward thinking State Insurance Dep't may allow. Once you've identified a good plan, HSA-eligibility is nice, but it shouldn't be the driving force.

Microcell,

At most companies, employees will run their insurance premiums through a 125 plan and have those amounts pre-taxed. Not sure if you can do that with your employer. I work with a bunch of people in your situation and typically, they will just pay the premium after-tax. However, some will have the amount pre-taxed. I can't confirm if this is correct, but this is what they are doing.

This is not a question you asked, but I have been analyzing HSA plans for the last three+ years and the cost /savings of a HSA plan over a traditional plan is not great when you select a HSA plan on the lower deductible side. For example, HSA plans with family deductibles from $2200 to $3000 are usually not as attractive as those with deductibles from $4000-$6000. I use a excel model to quantify the cost per dollar of risk and the lower HSA plans don't make much sense. If i was looking for a HSA plan for my family, I would start with the $4000 deductible, and make sure they are 100% co-insurance after the deductible! If you have the prices for all the HSA plans, email them over and i can send you the results from the model i use. Its fairly simple. I know it is hard to adopt a $4000 deductible, but if the premium savings is $700 and the extra risk is $1000, it makes more sense to up the deductibles (AS LONG AS you put that savings away in the HSA!)

JIM