There are a lot of misconceptions about Health Savings Accounts. This is partially due to brokers who don’t want to take the time to explain how they work since the commissions are much less. If you’d like to save about $600/ year in taxes, $3000/yr on insurance costs with less risk than traditional insurance, then here’s what you need to know about HSA’s.
First of all a Health Savings Account is not health insurance. It is a medical IRA that the government allows for IF you have the right kind of health plan. They call them High Deductible Health Plans but forget to mention “Low Cost” too! But wait, don’t traditional plans have low deductibles and copays?
Ever hear of coinsurance? Many plans may have a $500-$2000 deductible then on top of that they have $2000-$3000 of coinsurance! A $1000 deductible plus $2000 of coinsurance is a $3000 limit per family member! Some plans limit the maximum family charge to 3 times the maximum or $9000. An HSA health plan limits the family total to one lump sum of $5200 on average and cuts you’re your payment in half!
It generally costs about $80 to see a doctor on a plan without copay. Let’s say the family sees the doctor about 10 times/yr total. (Which is high) 10 times $25 is $250 while 10 times $80 is $800. You would have spent an extra $550 that year seeing the doctor but you saved at least that much on taxes with the HSA and we haven’t even calculated the savings on premium!
An HSA plan will save about $250/mo comparatively. In the example above you’ve paid an extra $3000 in premium just so you can have $25 copays. That’s why the insurance companies love you! But what if something major happened?
The $3000/yr savings keeps you ahead in case of a major bill. On top of that taking 50-80 bucks of your monthly savings and buying an accident policy that pays your whole deductible in case of an accident isn’t a bad idea either! These can be great no matter what kind of insurance you have. Save the rest in the HSA or other retirement accounts.
Even if you have insurance through work there are ways an HSA plan can work to save you and your family money! Please contact me to discuss your situation and how I can help you develop a money saving strategy with HSA’s. |
