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Health Savings Account, HSA - Is It The Medical Insurance Plan For You?

A Health Savings Account or HSA type plan consists of two main parts. The first part is a “catastrophic” health plan. The second part is a special savings account called an HSA. So what is catastrophic coverage? Catastrophic coverage has many definitions, but we will call it coverage that is a high deductible health plan, (HDHP) without the “frills” of copays for drugs and copays for doctor visits. A catastrophic plan should be there to protect you if you need to be hospitalized for sickness, surgery or any other catastrophic event. The high deductible health plan offers protection against unexpected, debilitating financial damage.

The terminology is rather confusing. People commonly refer to both parts as an HSA or Health Savings Account. The proper way to refer to such a plan is to say you have an HDHP and an HSA combination. As you can see, this is too cumbersome, so we call in an HSA type plan.

We talked about the first part, the HDHP catastrophic plan. Now, let’s talk about the second part, the HSA or Health Savings Account. This is a special savings account that you open up at a bank. It could be your local bank, or an internet bank. The money you can put into this account can be spent for a very wide variety of medical expenses. For example, you may want to visit an acupuncturist. An acupuncturist is not covered in your major medical plan, but you can use your savings money for this type of an purchase. You can use your savings for over the counter cough medicines, doctor visits, prescription drugs, eye glasses and vision checkups, dental care expenses and a number of other medical expenses.

Will an HSA, Health Savings Account, work for you?

  • Are you looking for a catastrophic plan?
  • Do you visit the doctor only four or fewer times per year?
  • Are you on a few or no medications?
  • When you visit a doctor, would you be content paying $60 for the visit instead of $25?
  • If you have to buy drugs, will you be satisfied paying a negotiated price, but not a $35 copay?
  • Do you have funds to deposit into an HSA account?
  • Are you looking to reduce the premiums you pay for health insurance? These are a few of the factors that you should examine and discuss when considering an HSA type plan. How does an HSA type plan reduce risk? Let’s take an example of a family of four. Typically, families will choose a $5450 deductible. Wow! That is a high deductible. But wait. That deductible is an aggregate deductible for the entire family. All four of the family members’ expenses go toward meeting this annual deductible. Once it is met, the insurance company covers 100% of the allowable expenses.Compared with a traditional copay type plan, one can argue that you have reduced risk. Why? Because each of the insured memers, up to three, has to meet his own deductible. It is much more likely that the family will hit the $5450 aggregate deductible than for three members to hit their individual deductible of typically $2500 each, or $7500. In addition, usually the copay type plan has coinsurance which adds to the out of pocket risk.Are HSAs the answer to our health care crisis? If you study the costs of elective cosmetic surgery, you will see that prices have risen ever so slightly over the years. Free enterprise competition among doctors has kept the price increases in check. Since cosmetic surgery is NOT covered by health insurance, there is no “third-party payer” involved. (The third-party payer is the insurance company.) Consequently, doctors have created special volume pricing, the surgery is done in their own operating rooms, there is no insurance company having to approve expenditures, and overall, there is much less red tape.

    Taking the cosmetic surgery example and applying it to HSA type plans; we see that when you put people in charge of their own medical expenses, they are quite frugal. They question the doctor when he suggests a series of tests. They are more concerned that the hospital makes no mistakes in their billing.

    In summary, HSA type plans offer lower premiums, lower risk and steadier, more reasonable premium increases. Knowledgeable people in the insurance industry feel that this is the direction that our nation should forge.

    • Richard Day has years of experience finding the exact plan that will fit his client’s needs. He adopted the HSA concept early, and will help you to understand how they work. This link for more information concerning the Blue Cross Blue Shield of North Carolina, Blue Options HSA If you would like comparison quotes visit: http://www.ehealthinsurancesource.com

    Article Source: http://EzineArticles.com/?expert=Richard_Day


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