Health Savings Accounts for 2009
Submitted by: Steve Klein
Health care costs are continuing to rise and health insurance premiums are unaffordable for many Americans. Health Savings Accounts (HSAs) often offer an affordable alternative for many self employed and individuals who purchase their own health insurance plans.
What is health insurance designed to do? I believe it is intended to limit your financial exposure should an unforeseen event occur that affects your health. Ask yourself the following question and you will see what I mean. What would automobile insurance cost if it covered regular maintenance such as oil changes, tires, etc.? Clearly, the premiums would be much higher. Automobile insurance is designed to limit your exposure to risk.
Many people use there health insurance frequently by running to the doctor’s office for something as simple as a common cold. They make their copayment and the visit is included in their monthly premium. This easy and unlimited access to a doctor for what I would suggest are non essential visits are what drives up the premium.
An excellent alternative is the Health Savings Account (HSAs) which blend a higher deductible with a tax savings that allows you and the insurance carrier to share the risk while still limiting your exposure to a known amount. Many of these plans will cover an annual physical for no cost and every thing else is paid by you at the contracted rate until you reach your deductible.
Let me explain. If a doctor charges $120 for a visit but your insurance carrier has a contracted rate of $55, then you will only pay $55 for the visit. Since most plans have a $20 or $30 copy, this is really not costing you much more but you are saving about 30% to 60% on your monthly premium. Once the deductible is met the carrier then pays 100% of future expenses.
Here is an example of the potential premium savings. A 45 year old male for a traditional plan with a $20 copy and $500 deductible would pay $507 a month. For the same client the HSA would only cost $139 a month for a plan with a $1,200 deductible. This tremendous savings more than makes up for the higher deductible and even if the maximum deductible was met, it would still save him lots of money.
For more information on these accounts and other plans, contact www.mrinsurancofmaryland.com or call us on 866-654-4844.
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