I need information QUICKLY about Health Savings Accounts and High Deductible HealthPlans?
MSH asked:
With an effective date of November 1, my employer sprung on us this week that we are changing from a traditional insurance plan with low copays, etc. to a High Deductible Health Plan with an HSA. I have tons of questions and my employer and his insurance agent are pretty much useless. I need to turn in my forms ASAP (like tomorrow) and haven’t found much online. It is a small company, like 25 people. We are going to have a $ 4,000 deductible and he is going to put in $ 3,000 of that over the course of the year. The maximum out of pocket is also $ 4,000 – but it is also up front. (I guess). Where can I get good information quickly? Should I accelerate expenses to the current plan or defer them to the new plan? Thanks.
Lelia Copus
With an effective date of November 1, my employer sprung on us this week that we are changing from a traditional insurance plan with low copays, etc. to a High Deductible Health Plan with an HSA. I have tons of questions and my employer and his insurance agent are pretty much useless. I need to turn in my forms ASAP (like tomorrow) and haven’t found much online. It is a small company, like 25 people. We are going to have a $ 4,000 deductible and he is going to put in $ 3,000 of that over the course of the year. The maximum out of pocket is also $ 4,000 – but it is also up front. (I guess). Where can I get good information quickly? Should I accelerate expenses to the current plan or defer them to the new plan? Thanks.
Lelia Copus
In my opinion the HSA qualified plans are the better plan for most people. That $3000 that your employer puts into the account is considered your money. It rolls over and adds up each year and you can take it with you when you leave. You pay your doctor visits and prescriptions from the account and the amount you pay goes toward the deductible.
For example, you visit the doctor. The doctor files with the insurance company. The insurance company sends you a summary of benefits showing the total amount billed and the amount approved. In my area the average cost billed for a doctor visit is around $150; the amount approved is $70 to $90. You will then receive a bill from the doctor for the $70 to $90 approved and you pay that out of the HSA account. The amount you pay then goes toward the deductible.
If something catastrophic happens the most you will be out of pocket the first year is $1000 ($4000 deductible minus the $3000 your employer contributes), which is probably much less than the co-pays and co-insurance you would have had on the traditional plan for the same catastrophic occurrence.
Here is some information on HSA plans:
My guess is that the new plan has a deductible that runs on calendar year (although there are new policies that run on the anniversary date of the coverage). It would be wise to get anything handled prior to November so that you would be able to protect the funds being given to you in your health savings account.
It does sound like a pretty good deal by your employer if he is putting $3,000 into a Health Savings Account. Once that money is in the account is yours and whatever is not used each year rolls over tax deferred.
In addition, you will also earn interest, again tax deferred in the account and anything that comes out for approved medical expenses is tax free.
In addition, due to the amount you are being given it sounds like you have other dependents on the plan, than you can actually add additional funds into the account up to to a total fo $5,800 (2008) which will reduce your taxable income.
Obviously you want to utilize the least amount of dollars in the health savings account (HSA) so as to build the amount in the account. This means it is important to stay involved in your medical care to keep costs down: Request generic prescriptions when available, ask your doctor questions on whether procedures are necessary, determine which labs are less expensive for tests, etc.
Your employer is saving on health insurance premiums by going to a high deductible plan (which can reduce your payroll deduction) but also is being very generous in funding $3,000.
Here is information about a HSA:
It’s 40 pages long, but it is much more detailed than you can get here.