Health Insurance: What to do in the Face of Rising Costs
- Tuesday, August 15, 2006
Of course, just like all federally regulated situations, there are rules.
Universal HSA principles
1. You must have an HSA-qualified high-deductible health plan to open or contribute to a health savings account (HSA) in your own name.
2. Switching to a high deductible health plan from a traditional low deduc-tible health plan will cut the cost of your health plan substantially. You deposit the savings gained into your health savings account. The whole point of a health savings account is to allow you to use that money on a tax-free basis to pay for your health expenses up to your new, higher deductible.
3. The money in your HSA is your own. This means your employer cannot tell you what to do with your own money or restrict what you can spend it on. Since it is your money, it goes with you when you change jobs.
4. You are in charge of your HSA funds, making you and your doctor the decision makers, not some third-party. Spending your own money also means that you will/should ask about the cost of health care expenditures, which will bring marketplace competition to the world of health care. Hopefully.
5. There is no time limit for when you can reimburse yourself for your health care expenses; you just need to keep legible receipts and records in case you do reimburse yourself, or in case you are audited.
6. You decide whether to spend from the account for your medical expenses and how much to spend, or whether to spend out-of-pocket and to save the HSA money for the future.
7. Anyone can contribute to another person’s HSA. The tax benefit from such a contribution is gained by the person receiving the contribution, not to the person giving the contribution.
8. You decide which company will hold the account, and what type of investments you make with your account. Any investment allowed for IRAs is allowed for HSAs.
9. IRS Publication 502 provides a list of allowable expenditures from your HSA.
The foregoing is just an overview of health savings accounts. Find more specific details at HSAInsider.com including how and where to open an HSA if you have a qualified HDHP.
Health insurance, like death and taxes, must be seen as unavoidable. However going broke to pay for it is not necessary. At least for now.
Questions to Ask When Choosing a Health Plan
• What is the real cost? Consider monthly premiums, co-pays and deductibles.
• Who pays for prescriptions? Is there a co-pay? Separate deductible?
• Which doctors can I see? Request the list of approved doctors and look it over carefully.
• What about specialists? Can you just make an appointment or must the primary-care physican decide if something is medically indicated?
• Will I have a choice of hospitals? Look at the list of approved hospitals. What happens if you are injured or get sick while traveling?
• Which prescriptions are covered? Check out the formulary—the list of medications the health plan covers.
• What other benefits are included? Like family counseling, chiropractic care, cancer screenings, dental and vision care.
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