Benefit Choices? Consider High Deductible Health Plans
As its name implies, high deductible health insurance plans come with high deductibles and are primarily designed to provide affordable coverage for major health and medical expenses. These plans are ideal for younger healthier workers with no significant pre-existing conditions.
The cost is relatively low because the insured must first satisfy a high deductible, ranging from $1,200 up to $11,900, depending on the plan purchased. Most people are able to lower their premiums by 40% to 50% with a high deductible HSA-qualilfied health insurance plan compared to a conventional co-pay plan.
When you are covered under a high deductible health insurance policy, you will have to pay out-of-pocket costs for routine doctor's office visits or trips to the emergency room for minor ailments until what you have paid out equals the amount of the deductible.
These plans typically come with an option to open a Health Savings Account, or HSA, into which you can make a tax deductible contribution in the amount of the deductible.
The HSA contribution limits for this year and 2011 are $3,050 for singles and $6,150 for marrieds. Folks age 55 and older can contribute an additional $1,000 over these limits.
Money in an HSA can be invested in funds similar to an IRA. The investment earnings will be tax-free when withdrawn to pay for qualifying medical expenses, such as deductibles and co-payments.
But be careful. Thanks to health care reform there is a new restriction affecting HSAs in 2011. Over the counter medications cannot be paid for with tax-free money taken out of any health care accounts, which includes an HSA.
While High deductible health plans can be an affordable policy which covers you for unexpected and large medical costs, you will need to first come up with the out-of-pocket costs - either from your HSA or from your own pocket - to satisfy the deductible before your insurance coverage kicks in.
