Health Insurance and You!

The popularity of Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs) has been steadily rising, especially in the eyes of employers. Health insurance provided by large employers is still the gold standard for individual and family health plans. This is why the trend of employer favorability toward HSAs and HDHPs has naturally, been followed by corresponding consumer enthusiasm. Consider the facts: the 2010 census by America’s Health Insurance Plans (AHIP) of U.S. health insurance carriers indicates that the number of people covered by HSA/HDHPs totaled 10 million as of January of this year. This represents a jump of 9 million people, within the last five years.

You might be thinking, “Ok, the numbers speak for themselves, but why should I be interested?” The answer is simple: our belief in consumer driven health care is the very foundation of an HSA. These accounts give you (the consumer) an economic incentive to manage your own health care expenses by combining:
1)    A tax-free savings account for medical expenses, with
2)    A high deductible health plan that meets requirements for deductibles and maximum out-of-pocket limits.
Another benefit is the variety of preventative care options (i.e. doctor visits, physical exams, immunizations, well-baby visits) provided by HDHPs, which can be taken advantage of without having to meet the first deductible. The report also indicates that preferred provider option (PPO) plans were the most popular products among HDHPs.

One can expect these changes are here to stay, at least for the foreseeable future. The Wall Street Journal reports, “64% [of large employers] will offer a high-deductible plan with an HSA for 2011.” If you opt for a HDHP, opening up an HSA is a smart way to save money for medical expenses incurred during retirement. Unlike funds stored in a 401(k), this money can be withdrawn tax-free, for medical purposes, before or after age 65. One change in HSAs, noted by The Washington Post, comes via health care reform and is effective January: “if you use your HSA for nonmedical expenses, you’ll be hit with a 20% penalty instead of the current 10%.” However, this penalty no longer applies after you turn 65. If you can afford it, you should open up this account in addition to your 401(k), and build up both for future medical/retirement expenses. To learn more, check out this brochure about HSAs from the U.S. Department of Treasury. Also, check out this comprehensive “Common Sense Guide to Health Savings Accounts.”