Choose your plan wisely.
Tis the season of open enrollment and if you are like me, you’re trying to figure what you’re going to do about your health insurance for the coming year. On top of choosing the right coverage, you also have to decide what additional health savings plan works best for your situation. Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs) are gaining popularity with employers (especially employers with younger and healthier workforces). Many companies are offering their workers the option of enrolling in an HSA or similar account instead of the usual HMO or PPO. Here’s how these new consumer-driven health savings accounts work.
The HSA- Health Savings Account.
An HSA gives you a tax-exempt savings account to pay for your own health care expenses. Money you don’t spend in one health plan year rolls over to the next. You are also enrolled in an HDHP (High Deductible Health Plan), in which your insurance company will only pick up the tab for major health care expenses (including types of preventive care, maternity care, and pediatric primary care). In 2007, the minimum deductible on an HDHP is $1,100 for individuals and $2,200 for families.
The rising popularity of HSAs can be summed up in two words: low premiums. In the traditional insurance plan, you pay high premiums up front; in the HDHP, you pay lower premiums and essentially assign the savings to your own health care expense account.
Individuals can currently put up to $2,850 per year in an HSA, families $5,650 per year. The money grows tax-deferred and distributions are tax-free (if they are used to pay for qualified medical expenses). You can even invest HSA assets. If you’re 65 or older, you may withdraw money from an HSA for any reason without tax penalty.
The HRA- Health Reimbursement Account.
While an HRA is a tax-advantaged account like an HSA – the account savings grow with time – the assets in an HRA don’t belong to you. They belong to your employer, and they revert back to your employer when you leave your job. The HRA is essentially a favor your employer does for you – a reimbursement account rather than a true “asset” in your possession.
The FSA- Flexible Spending Account.
With an FSA, you deduct pre-tax dollars out of your salary to pay qualified medical expenses. You can designate an FSA for your own health care expenses or for those of a dependent. But most FSAs are “use it or lose it” – at the end of the plan year, the money left in the account doesn’t roll over into the next year. Employees tend to minimally fund FSAs as a result, although they can be used in conjunction with HRAs.
If you have questions about HSAs, HRAs or FSAs, why not speak with a financial or insurance professional as well as your human resource officer? It’s wise to get as much information as you can before making the switch from an HMO or PPO.
This was prepared by Peter Montoya, Inc., Securities offered through LPL Financial, Member FINRA/SIPC.
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I get health insurance through my employer so I do not have to worry about it as much although nice to know just in case things change.
This year my employer started offering HDHP plans. I signed up and now we are both saving money. I thought it was a great way to reduce the bottom line.
The thing to remember about these plans is that you are going to self insure yourself and your family up to your deductible and out of pocket maximum. So you if you to the doctor a lot it’s probably not a good idea.
My wife and I are planning to get pregnant and the HDHP will end up being about 500 dollars extra from start to finish. This amount is easily made up since I’m saving 1000 dollars a year (All of which is going into the HSA) plus my employer is putting 1000 dollars into my HSA account. It is worth it for me and of course the company since they wont pay as much in health care premiums either, and that is after the 1000 dollars they are putting into the account.
More and more individuals and companies are moving to consumer-driven health plans – HSAs + qualified high deductible health plans. With this type of health plan, you may be responsible for thousands of dollars in out-of-pocket costs. The problem is, consumers are not used to “shopping” for healthcare and don’t now how to stretch their healthcare dollars.
MyHealthandMoney.com is new website that my team is building to help individuals and families learn to shop for their healthcare. We’ve built comparison pricing tools so our members can do their research and figure out how much that test or procedure their doctor ordered is going to cost at facilities in their area. They can then choose the facility that meets their budget and quality standards. It’s amazing to see the difference in prices and empowering to be able to choose!
You can find also find discounts on prescription drugs and health services like blood work from Quest Diagnostics and counseling sessions from Pyschology.com.
A membership to MyHealthandMoney.com only costs $4.99 a month. This cost is to help us remain independent and advertising free, while we work to negotiate discounts for our members. Our goal is to help people stretch their HAS dollars by learning to shop for their healthcare.
Here are some ways you stretch your healthcare dollars:
Save on health services including 15% off blood work
Perhaps you’ve skipped a doctor’s visit because you don’t want to pay the out of pocket for a physical and bloodwork. There’s a lower cost alternative – go to the lab. Quest diagnostics is the world’s leader in diagnostic laboratory testing, information, and services. As a MyHealthandMoney.com member, you can save 15% off any of their health screening test including a Comprehensive Wellness Screen which includes 29 tests including heart, diabetes, and whole body tests. A friend recently went to their doctor and was charged over $600 for annual bloodwork plus the cost of the doctor’s visit. Call and ask your doctor’s office how much the fees for your exam and bloodwork will be. If the estimate is over $100 consider getting the 15% discount and going to a Quest location near you – the cost will be about $100 or less, depending on the test you choose.
Save up to 20% on prescription drugs through the mail-service pharmacy
Does your health insurance include a pharmacy benefit? If not, you’ll find significant savings over customary drug prices and Internet pharmacies at MyHealthandMoney.com’s partner pharmacy, PBM Plus. It’s not the simplest of checkouts – you’ll need to complete a couple forms and mail, fax or call in your prescription, but the savings can be significant.
Take a 90-day prescription of the popular ADHD drug Concerta. Here are prices as of today 11/24/2009 from major online pharmacies for Concerta 27mg 90qty:
Drugstore.com – $404.94
DestinationRX.com – $404.94
MyHealthandMoney.com – $342.21
If you include the $4.99 membership price which comes to $347.20, you still save $57.74 using MyHealthandMoney.com’s mail-service pharmacy.
Compare prices on diagnostic tests and hospital procedures
There are several sites coming online that claim to offer transparent pricing tools. The only trouble is, many of them are based on Medicare data, which is not the “retail” price or the price that could be charged to your insurance company. MyHealthandMoney.com staff has called hundreds of facilities to get accurate retail prices and applicable discounts for diagnostic tests in your area. You can see sample data that shows typical price variations before you actually sign up and use the tool.
Knowing the prices of tests and procedures before you get the bill is an important first step in making smarter healthcare spending decisions and stretching those HAS dollars. Think about how many times you have gone in for an exam or procedure and have been surprised by the bill. It is your responsibility to find out the cost of your treatment – after all, you are the one responsible for paying for it!