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The least understood Health Insurance plans

How do Health Savings Accounts work?

Health Savings Accounts (HSA’s) are the least understood health insurance plans, as they there are actually two parts to making them work effectively. First of all they are not recommenced for everyone as there are advantages and disadvantages for how they function. Overall they are lower cost than traditional plans.

Two parts to an HSA

1. Health Insurance plan: The HSA is a high deductible plan WITHOUT up front doctor visits. For 2016 there are two companies that have the best HSA’s (Group Health Cooperative and Premera). These plans are more affordable and have a lower max out of pocket.

2. Health Savings Checking Account: This is an actual checking account that you put money into that is tax deductible when it goes in, grows tax free and pays out tax free for qualified medical expenses. Really the only way the government never touches money going in or out. Also the money never “expires” it can be used for medical expenses anytime in the future for the family memebers.

I strongly recommend using HSA Bank (Click Here to Sign up), as they do an amazing job!

 

There are primarily two different types of people that HSA’s are best for. First, is the person that knows that for the current year they are going to spend a significant amount of money on medical expenses (like someone that’s going to need a $30,000 surgery). In this case the Premera Silver $3,000 HSA is your plan with the LOWEST Max out of pocket on the market at $4,100.

For a 50 year old on the Premera Silver $3,000 HSA is $441/mo with a $4,100 max out of pocket compared with the Premera Gold $1,000 that would be $578/mo that has a $4,500 max out of pocket. Just the premium savings is $1,644 (the $441/mo vs the $578/mo). Then the MAX out of pocket is $400 lower and you get a tax deduction for putting the $3,350 into a HSA checking account (Wells Fargo or Key Bank) that saves about $1,000 off their 2016 taxes owed. Overall this 50 year old would save about $1,644 + $400 + $1,000 = $3,044 just for getting the Premera Silver $3,000 HSA plan compared to a Premera Gold $1,000 Traditional plan. Yes the savings are real, but you need to know that with a HSA you pay for 100% of doctor visits up front…but can save a lot of money if you intend to use the plan a lot!

1. You have a lower max out of pocket.

2. The Silver Premera or Group Health Cooperative plans are cheaper than Gold plans.

3. Tax Deduction for putting money in an HSA Checking Account with a bank (Wells Fargo, Key Bank or Premera has an HSA bank).

Overall this triple benefit is best if you are intending on having a lot of medical expenses.

The second person that HSA’s are built for is the person that has some money in the bank and can afford to pay 100% of the first $4,500 with Group Health Cooperative or $5,250 with Premera before the Deductible. Since there are no up front doctor visits if you have a $4,000 medical bill you pay it all. However the premiums are usually slightly lower, the MAX out of pocket is lower and you get a tax deduction if you put money in a HSA checking account (up to the max allowed). 

For a 50 year old with the Group Health Cooperative Bronze Traditional Plan for $326/mo compared with the Group Health Cooperative Bronze HSA Plan (about the same price with GHC) for $328/mo. The MAX out of pocket is $400 lower and you get a tax deduction for putting the $3,350 into a HSA checking account (Wells Fargo or Key Bank) that saves about $1,000 off their 2016 taxes owed. Overall this 50 year old would save about $0 + $400 $1,000 = $1,400 just for getting the Group Health Cooperative Bronze HSA compared to a Group Health Cooperative Traditional plan. Yes the savings are real, but you need to know that you pay for 100% of doctor visits up front.

In conclustion, the Health Savings Account Health Plans are not for everyone, but do have value for those that want to fully utilize the benefits. If you have any questions give us a call at 425-802-2783.

Below are my areas of expertise:

Gary Franke, MBA
Independent Broker
Achieve Alpha Insurance, LLC           
12507 Bel-Red Rd, Ste 103
Bellevue, WA 98005
(425) 802-2783
gary@achieve-alpha.com
www.achieve-alpha.com