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Health Savings Accounts

Posted June 25th, 2010 in Health Insurance by admin

By far, the most powerful tool available in the fight to save money on health insurance premiums is the Health Savings Account (HSA). Not only are HSA plans typically lower in premiums than traditional HMOs and PPOs, but their benefits are richer and the coverage is easier to understand.

When people and small businesses shop for health insurance, they look for the best plan they hope to never need. However, the smart way to purchase health insurance is to buy the plan that should you need it, offers the best coverage for the least amont of money.

One of the biggest mistakes consumers do when purchasing health insurance is paying more for a plan which has a lower co-pay dollar amount. Unless you go to the doctor several times PER WEEK, a lower co-pay plan just doesn’t make sense. And if you do go to the doctor that often, an HSA plan would be better suited for you anyway since the maximum out of pocket costs are typically lower on an HSA and a PPO or HMO.

The way health insurance companies scare people away from HSA plans is by having no co-pay amount allocated. However, let’s look at some real numbers. Imagine having a PPO plan with a $30 copay, $5000 deductible and $15,000 maximum out of pocket that costs $397 per month. Note that this plan has a maximum out of pocket cost of $15,000!! Now let’s look at an HMO plan that has a $10 copay. The HMO costs $1227 per month and has a $1500 deductible and a maximum out of pocket cost of $6000.

Now let’s look at an HSA plan. There are a couple ways to look at HSAs. You can either pay about the same amount as you are currently and lower your total overall exposure (maximum out of pocket) or lower your monthly premium, increase your deductible and again lower your total maximum out of pocket and still save money!  How’s that for better coverage, less cost, lower total exposure? Although the HSA plan has NO COPAY (ie: you pay NOTHING at the time of the visit with the doctor because they will bill you later – very good for tight cash flow patients), one HSA plan has a maximum out of pocket of $10,000. What’s important to know is that once you obtain the maximum out of pocket limit on an HSA plan, YOU NO LONGER PAY ANYTHING!!! With an HSA plan, you can save $220 per month versus the PPO and $1050 per month versus the HMO!!! Imagine saving between $2640 and $12,600 per year on health insurance premiums alone!!!

Don’t forget you can layer your coverage with the accident reimbursement plan and, assuming you have an accident which causes you to hit your maximum out of pocket in one incident, you can reduce your total exposure to $100!!