Friday, June 09, 2006

High Deductible Health Plans

A long time ago, Debbie wrote about Health Savings Accounts. Many are familiar with the type of thing she wrote about - an account into which you can voluntarily put some of your paycheck, to be used for anticipated medical expenses. You lose the money at the end of the year if you don't use it.

I have a Health Savings Account, but thanks to some newer laws, it is much nicer. It goes along with the high-deductible health insurance that I have through work. If your work does not offer health benefits, though, you can still buy a high-deductible health plan with an HSA for yourself.
My health insurance has a deductible of $1250 per year, so every month, $104 is withheld from my paycheck (pre-tax) and put into the HSA account. I can use the HSA funds to pay the deductible when I get medical services or prescriptions, but I can also use it for any other medical expenses (including something like LASIK eye correction surgery, or a weight loss program), even if they are not covered by insurance.

The money in the account doesn't go away at the end of the year; it stays there and as long as I have a high deductible health plan, I can use it as described above. At retirement age, it acts like a 401K and I can use it for anything I want.

Meanwhile, the insurance still serves a purpose. It is a PPO (preferred provider thingy), so when I go to the doctor, her bill for (for instance) $150 goes to the insurance company, they correct it to $80 because that's what she has to agree to in order to be in their network, and then the $80 bill comes to me to pay from the HSA.

Once I meet the deductible, any further expenses are covered by the insurance.

Since my insurance is provided by my employer, I don't know what it actually costs - they pay the whole thing, and all I pay is the money that goes into my own account.

Although this is more complicated than regular insurance, I like it a lot. I like seeing the money pile up in the account. I think spending your own money encourages you not to be wasteful. This is a nice new legal option for individuals who have to buy their own coverage as well. (I had a high-deductible plan years ago and it was pretty cheap - something like $500 for the entire year. Obviously it's more difficult for older people and those with pre-existing conditions to get covered at a reasonable price.)

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