The share of workers enrolled in a high-deductible health plan increased substantially last year, according to new research from the State Health Access Data Assistance Center at the University of Minnesota.
About 56% of people with employer-sponsored coverage had high-deductible plans in 2021. That’s 5.3 percentage points more than in 2020.
Few people like paying significant sums out of pocket for healthcare. And that’s just what high-deductible plans tend to require.
But they’re actually in the financial interests of many Americans — especially when paired with a tax-advantaged health savings account, or HSA.
People must have a high-deductible plan if they wish to contribute to an HSA.
The minimum deductible for such a plan is $1,400 for an individual or $2,800 for a family.
Out-of-pocket expenses — including deductibles, copayments, and coinsurance — can’t exceed $7,050 for an individual or $14,100 for a family.
Those potential out-of-pocket expenses come with significant tax benefits, if people take advantage of what HSAs can do.
Money is tax-free going in, grows tax-free within the account, and is tax-free going out, as long as it covers medical expenses.
This year, individuals can save up to $3,650 in an HSA for healthcare expenses. Families can put away up to $7,300. The triple tax advantage HSAs offer can amount to thousands of dollars in value each year.
Indeed, the tax savings alone can beat the return a person can get on cash, bonds, and all but the highest-flying stocks.