Other insurance with HSA coverage

[Guest parrot87]

For HSA's, some other forms of health coverage are allowed to exist alongside the HSA/CDHP format. I've attached what the IRS says on their website below. Is there a list of specific diseases/illnesses allowed? If so, could you direct me to that list. As for the hospitalization insurance, is it just hospitalization or insurance classified as "hospital indemnity"? Some hospital indemnity policies carry reimbursement for outpatient surgeries. What about a surgery done at a hospital that does not require "hospitalization"? Clarification would be great.

Here is what the IRS says:

http://www.irs.gov/publications/p969/ar02.html#d0e174

Other health coverage. You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan.

You can have additional insurance that provides benefits only for the following items.

* Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of

property.

* A specific disease or illness.

* A fixed amount per day (or other period) of hospitalization.

You can also have coverage (whether provided through insurance or otherwise) for the following items.

* Accidents.

* Disability.

* Dental care.

* Vision care.

* Long-term care.

[leevena]

I do not believe there is such a list that you could rely on. You can be covered by a HSA and also have a spefic disease/illness or an hospital indemnity plan. In fact, many employers who offer HSA's will also offer one of these plans as a way to fill in some of the gaps.

[Guest parrot87]

I understand that a specific disease/illness and/or hospital indemnity plan is compatible with an HSA.

What about a hospital indemnity plan that pays per admission. What length is then considered an "admission" for the IRS? What if I receive a minor surgery in the hospital that costs $5000, but do not stay overnight in a bed. Is that still compliant with an HSA under "hospital indemnity"?

What about if I purchase a hospital indemnity policy that has not only a hospital indemnity clause, but also covers complex imaging, emergency room visits, and so on...does the mere mention of non-eligible HSA "other coverage" cause the HSA portion to be in non-compliance?

[leevena]

Without seeing the actual plan or contract, I need to be careful, but hospital indemnity plans that you mention are allowed. The key to these type plans are that they are identified as a "limited-pay" program. Hope this helps.

[Guest parrot87]

Bump, the IRS refuses to answer the question.

I've attached 2 pdf's with more details. I'll go through some more scenarios:

The IRS is not clear as to what services are compatible with HSA accounts. Some hospital indemnity plans offer ambulance benefits. Some offer diagnostic benefits. Some offer preventative visit reimbursement. One big thing I would like to know is if outpatient surgery services are HSA compliant. For instance in my area, Health America does not have Fox Chase Cancer center in network. They like to use the Fox Chase sponsored outpatient center which is located in another local Hospital, which is in network. IF I were to go to use this facility, how would the IRS classify that? It is a procedure done at a hospital but billed as an outpatient procedure. What is the scope of "hospital indemnity"? Is an overnight stay in a bed required?

Medical_Bridge_3000___Outline_of_Coverage.pdf

Hospital_Indemnity.pdf

[leevena]

It is not the expenses that are an issue, it is the type of insurance contract that is the issue. Your comment in the last post (One big thing I would like to know is if outpatient surgery services are HSA compliant.) is irerelevant. The question is what type of contract is covering the expense. If it is a hospital indemnity, you are ok. If it is a group plan, it is not.

Hope this helps.

[Guest parrot87]

That does help, although since the IRS doesn't have any comments on this, I'm afraid that they will retroactively punish "abusive" arrangements as they have in the past. The "sniff" rule is a duesy.

[leevena]

I would not be too concerned. To begin with, I doubt if anyone would want to answer your question without detailed, verifiable and 100% understanding of the type of coverage you are questioning. Secondly, many of these plans have been marketed as a companion to HSA's. I have been selling them like this for some years now. Good luck.