HSAs: Choose Your Care!

 

Once you meet your deductible, you have a copay or coinsurance. A copay is a set amount per visit that you pay. Coinsurance is a percentage of the bill rate that you pay. These are paid until you meet the out-of-pocket maximum.

 

Premiums are the amount you pay monthly for the privilege of insurance. In most cases, your monthly rate goes up as your deductible goes down and in many cases people over insure themselves. Remember to take into account the amount of money you pay in premiums when calculating all of your costs. If you don’t you are not getting an accurate estimate of your costs.  Let’s look at an example:

 

Two identical plans that have a difference of deductible of $2500/year may be as much as $250/month difference in price. It is also important to look at the out of pocket maximum. For example, two plans that look completely different:

 

Plan 1:  $10,000 deductible but no coinsurance once deductible is met

 

Plan 2: $5,600 deductible with 50% coninsurance up to $4,400

 

Which plan is better?   Both are HSA eligible.  Plan 1 has no fees once the deductible is met.  The out-of-pocket maximum for both plans is the same, but Plan 2 though costs almost $200 less per month.   This means that if you meet your out-of-pocket maximum, you will pay $2400 more per year for the same coverage if you choose Plan 1.  Remember, even if you have a high deductible or high coinsurance payment, the maximum you will have to pay will be the same. The only savings you have is if you don’t meet the maximum. Plan 2 actually is a better choice in this case as your visits are half off up to $4,400 (because of the co-insurance).

 

If you are want preventative care, are healthy and are in a moderate to high tax bracket, a Health Savings Account (HSA) is a very effective way to pay for this care and save money. Most HSA plans require high deductibles and allow you to put up to $3000 per year (in 2009) into your HSA for an individual and $5950 for a family. All of this money is tax-free and can be used, depending on the plan, for qualifying medical expenses including, Naturopathic medicine, supplements, lab tests,  and imaging.  Entrepreneurs can set up HSAs for themselves  and their employees as well!

 

Let's put this in perspective for a moment. Let’s say your employer offers an HSA but no Naturopathic medical care and you want to see a Naturopathic Physician at a return visit fee of $100.   If you are in the 30% tax bracket, with an HSA you are saving $30 so the visit is $70 (and your  prescribed natural medicines may qualify as well).  Plus, the full $100 may be applied to your deductible depending upon your plan.

 

The HSA thus offers you, the preventatively-minded health consumer, the option to have more control over  your health care choices while enjoying a distinct financial benefit!  What could be better?  Ask your employer about an HSA option today.