- Share This Post
- submit
- 2
-
Sparkle (0)
Last week I talked about Navigating the Health Insurance Waters as a self-employed individual. While the waters may never totally be clear or calm I am at least moving toward some clarity for myself (at least for now). In the process I spent a lot of time attempting to understand a relatively newer form of insurance that seems to be gaining in popularity, the High Deductible Health Plan (HDHP) with Health Savings Account (HSA).
If you are new to this conversation like I was just a few weeks ago, you might be asking, what the heck is a High Deductible Health Plan and HSA? They are actually two different things, but work in conjunction. Here is the cliff notes version to what's what.
What is a High Deductible Health Plan?
Here's a nice summary from Tricia at Wise Geek:
A high deductible health plan, often called consumer driven insurance, is a health plan with lower premiums and a higher deductible for major care, like a hospitalization or surgery. At the same time someone enrolls in a high deductible plan, he or she may also need to enroll in a health savings account (HSA). Generally, the person may put up to the amount of the deductible from income into this account, and the money is not taxed. Deductibles vary from as low as 1000 US dollars (USD) for an individual, to several thousand USD for family or couple coverage.
Basically it is health insurance that covers you for unusual and catastrophic illness and injury. What that means is, don't expect to see any money or co-pays when you do your usual yearly thing - annual exams, yearly tests, trip to the doctor for the flu, etc. But, if you have an unexpected situation in any given year or acquire a chronic or acute condition (major injury, cancer, heart disease, sudden hospitalization or surgeries) you are covered. Essentially you are using insurance for its original intent - to protect yourself against major financial woes.
What is a Health Savings Account (HSA)?
A HSA is a tax advantaged savings plan which can be used for allowable health related expenses. Think of it as a mini short-term IRA for health expenses. Not just anyone can open one, however. First your HDHP must qualify and then you are limited to a maximum amount of annual contributions into the HSA. For 2008 these IRS requirements look like (Source: Benefits Alert):
Employees with self-only coverage under high-deductible health plans can contribute up to $2,900. The minimum annual deductible for a high-deductible health plan is not less than $1,100. Annual maximum out-of-pocket expenses (i.e., deductibles, co-payments, etc.) can't exceed $5,600.
Employees with family coverage under high-deductible health plans can contribute up to $5,800. The minimum annual deductible for a high-deductible health plan is not less than $2,200. Annual maximum out-of-pocket expenses (i.e., deductibles, co-payments, etc.) can't exceed $11,200.
So why are these becoming so popular now? Essentially the health care crisis that exists in this country is part of the driving force. The exponentially increasing costs of health care coupled with the lack of universal health care are simply creating an environment of desperate need for health care reform. These plans are one attempt to help bridge that gap in the meantime while the politicians and big pharma and medical folks battle it out. Let's hope the changing of the guard in November coupled with more awareness of the health care woes from vehicles like the movie Sicko will help.
People are dissatisfied and at the mercy of the insurance companies that hold the power. According to a recent Gallup Poll (Source: Everyday Citizen):
A mid-November Gallup poll found that the public is more dissatisfied than ever with out-of-control health care costs. An overwhelming 81 percent said they are dissatisfied with the cost of health care in this country, the highest figure recorded on this question since Gallup first started asking it in 2001.
For now, though, people remain uninsured or insured but unsure of what truly IS covered at an alarming rate. Pam Pohly shares:
More and more American workers are losing their health coverage in the workplace as employers increasingly refuse to offer it. The Americans most likely to go without insurance now are those earning less than $46,650 a year and the majority of these
