Health Insurance Carrier - The Bills.com Blog

10/11/07 - Re HSA's I am wondering whether you are considering HSA's as a possible solution to health coverage and if not, why or why not. If considering an HSA, here is a concern I had recently.... Aside from understanding the tax and financial benefits of an HSA, there remains the problem of understanding how the quality of a high deductible plan compares to the coverage which most employed people have via their employment, i.e., group coverage. I am guessing that since these are plans are mostly (?) offered by insurance companies and/or their agents or affiliates, there may well be undisclosed differences in how the underlying health plans operate, are managed, and most importantly, what is or is not covered and at what price, etc. We seem to be receive alot of hype about the tax and savings beneifits but silence as to coverage and quality of care offered, etc. Have you any information which may assist a consumer in evaluating the same? If the underlying health coverage is poor or relatively expensive, that may negate other tax or financial benefits, etc. How does the consumer evaluate the entire picture? Are there some sites with helpful comparison's and/or evaluations? Thanks Richard Norton

The benefit of an HSA, or Health Savings Account, coupled with a High Deductible Health Plan (HDHP) is that it can save many people money on their health insurance costs while providing adequate medical coverage. The premiums on HDHPs can be significantly less than those of a standard PPO or HMO health plan, since you are required to pay a much higher annual deductible, thus paying for much of your routine medical care yourself. The Health Savings Account allows you to save pre-tax (if your employer sets up the HSA) or tax-deductible (if you set up the HSA) money to cover most or all of the deductible on your HDHP. These plans are especially beneficial for young, healthy individuals who do not have large medical costs on a yearly basis, as the reduction in premiums more than outweighs the increase cost of medical care under these plans. The fact that you can use pre-tax dollars to cover your deductible makes these plans even more attractive. These plans can also assist individuals with very high medical expenses, because after the high deductible is met, these HSA compatible HDHPs cover expenses like medications just like any other insurance plan, but with significantly lower premiums. The problem with these plans is that many people are tempted to underfund their HSAs and find themselves unable to pay their high deductibles. Also, if you need medical services before you have built enough money in your HSA to cover the deductible, you could be facing a large out-of-pocket payment that could cause you serious financial trouble. I do not know enough about your medical and financial situation to tell you if an HSA/HDHP is the right choice for you. I encourage you to research this option on your own and then sit down with an insurance professional to discuss your options and which one will provide the most coverage at the least cost to you. A good place to start your research is the U.S. Treasury Department’s website dedicated to HSA and HDHP information, available at http://www.treasury.gov/offices/public-affairs/hsa/. I wish you the best of luck in finding the right insurance solution, and hope that the information I have provided helps you Find. Learn. Save.