 Health Saving Accounts(HSA)
High Deductible Health Plan (HDHP) offers a new direction in health management. In the past healthcare coverage has been a benefit mostly provided by employers without much involvement from the employees. Here is how it worked in the past. You start a new job, employer offered you couple of different HMO and/or PPO plans, you select one and then pay your copay at the time of service and you're done. There was no incentive for taking good care of yourself and making less frequent visits to your primary care physician. All this is changing with HDHP plans. Remember, you save on auto insurance premium if you're a responsible and safe driver, so why not on your health insurance premium if you manage your health responsibly? This very question is what triggered these new products in health insurance marketplace. People are sick of paying for others who are don't manage their health responsibly and make everyone in the group coverage pay more to cover these patients. Most HDHP plans are offered with a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) that provides traditional medical coverage and a tax free way to help you build savings for future medical expenses. The HDHP/HSA or HRA gives you greater flexibility and discretion over how you use your health care benefits.
HSA plans were first made available to consumers in January 2004 and have become more popular since then.
An healthcare plan with Health Saving Account(HSA) has 2 components:
 A qualified high deductible health insurance plan
An Individual Tax-exempt Bank Account (savings/investments)
The bank account is designed to pay for routine medical expenses/and or provide savings for the future. Money put into the account can be used either during the year or accumulated in the account. Allowable medical expenses are defined by the IRS, and are much broader than most insurance carriers (i.e. includes dental, vision). Individuals can deduct dollars contributed to the HSA account from their gross income, resulting in tax-free medical dollars. The account is similar to an IRA account, however it is only for qualified medical expenses.
HSA premiums are lower than other fully-insured plans with co-pays. Go here to see an example of saving using HSA plan.
Remember, funding of the health savings account comes from the dollars not being spent on a plan which "pays" for the privilege of co-pays and lower deductibles.
By allowing individuals to keep the money in the account not used, the government reintroduces the consumer into the health insurance equation; creating an incentive to check bills, compare costs, and evaluate urgency/frequency of appointments. You need to have an HDHP plan in order to open a Health Saving account.
The HDHP features higher annual deductibles (a minimum of $1,100 for Self and $2,200 for Self and Family coverage) than other traditional health plans. The maximum amount out-of-pocket limits for HDHPs participating in the most employer programs in 2007 is $5,250 for Self and $10,500 for Self and Family enrollment. Depending on the HDHP you choose, you may have the choice of using in-network and out-of-network providers. Using in-network providers will save you money. With the exception of preventive care, you must meet the annual deductible before the plan pays benefits. Preventive care services are generally paid as first dollar coverage or after a small deductible, or co payment. A maximum dollar amount (up to $300, for instance) may apply.
|
