A Health Savings Account (HSA) plan is being called by some the 21st century savior to our Healthcare system. Bold statement, but let’s find out why! A HSA plan by Federal definition must be a High deductible plan, with a wellness benefit and a threshold at which point the plan kicks in and pays 100% for all care, including hospital, surgical, medications, and Doctor visits. You pay for all the small stuff until the threshold is met, then the insurance kicks in and covers the rest of your care (and family's if on a family plan) for the year 100%.

Additionally, a HSA plan is completely tax leveraged! What that means is take the example of the traditional co-pay plan in the previous article. A self-employed person can write off the premiums, but only the Out-of-Pocket expenses that exceed 7.5% of their adjusted gross income. So, if you are on one of those co-pay plans and have a $5,000 deductible (Yes, they do exist!!) and an Out-of-Pocket max of $7500, none of your expenses for that ankle surgery are tax deductible if you make over $100,000. That is a huge missed tax deduction.

Now, let’s unwrap High deductible. I have some plans as low as $1750 up to $5,000 for an individual, $3500-$10,000 for a Family. That right, your total EXPOSURE (from the previous article) is the deductible. AND, all your expenses towards that deductible are TAX deductible from dollar one. Further, in the individual/family market a HSA plan costs about 65% of a traditional “Co-pay” plan…a 35% savings!

Back to the HSA plan being the savior of our Healthcare system. To me the biggest problem with our Healthcare system is the lack of transparency. What that means is unless you have a co-pay, you have no idea what the cost of your visit is going to run you. We have been trained to rely on co-pays because as I said last month, the Doctor charges $250-300 for a visit! Well, as we learned, that is before the insurance negotiated rate kicks in. If you knew that the average Doctor visit cost $86 last year at the negotiated rate, would you be a little less scared. If you knew a chest x-ray cost about $50, and routine labs, about $15. I even saw one lab bill out $90 for a pregnancy test, and the insurance negotiated rate was $9. We, as consumers have no price list. That is transparency. If you knew how much it was going to cost ahead of time at the non-inflated price, but at the insurance negotiated (yes, the HSA plans get insurance negotiated prices) wouldn’t you be more inclined to take on that exposure to the smaller stuff and have your Health Insurance cover the bigger stuff. I know I am, especially when I am saving (and re-directing to my Health Savings Account, building our retirement) about $2200 per year in insurance premiums versus the traditional co-pay plan for my family.

A HSA plan must be combined with an account at a bank of your choosing, but set up as a HSA, like setting up an IRA. The money you save in premiums, can be deposited to grow tax deferred to 65, with the ability to pull it out to pay qualified Medical, Dental, Vision ect. Expenses without penalty. For more on HSAs visit http://www.davidlindseyinsurance.com/faq.html .

A HSA plan may be right for you, but maybe you are uncomfortable not having the young children on the HSA. That would be a time to split the family to maximize coverage and cost. The children can be placed on a lower deductible co-pay plan with prescription coverage and the parents on the HSA. And yes, the Mom would still get her wellness/annual check benefit as the Federal guidelines stipulate. There are certain strategies involved when talking about a family with children. To better understand if a HSA is right for you and your family, please contact us at 858/ 245-4796 or email at dave@davidlindseyinsurance.com . We stand ready to help.