New Visitors Privacy Policy Sponsorship Contact Us Media
Baby Boomers Family Green Home and Auto In Critical Condition Just Starting Out Lifestyle Money
- advertisement -
Bankrate.com
News & Advice Compare Rates Calculators
Rate Alerts  |  Glossary  |  Help
Mortgage Home
Equity
Auto CDs &
Investments
Retirement Checking &
Savings
Credit
Cards
Debt
Management
College
Finance
Taxes Personal
Finance

 
Understanding high-deductible health plans
Page | 1 | 2 | 3 |

Plans differ widely on their options.

- advertisement -
JoAnn Laing, author of "The Consumer's Guide to HSAs" and "The Small Business Guide to HSAs," recommends that anyone looking for a high-deductible health plan to get at least three quotes. You can get these through independent insurance agents.

"Make sure the quotes are for comparable policies," she says. "If one has a lifetime cap on benefits and the others don't, they aren't comparable. Look for specific options that are applicable to you. If you aren't planning on having a family, you don't need maternity coverage, for example. If you travel a lot, you'll want some provision for out-of-network-care coverage. Look for provisions about renewal and rate increases, and get some type of commitment in writing there."

There are some plans that exclude preventive care from your deductible, meaning that physicals, well-baby care and other preventive care is covered without charge to you or through a co-pay. However, under most plans, routine doctor's visits aren't covered, and many don't cover prescriptions. So, instead of paying a $25 co-pay when you visit your doctor, you might owe $75 or $100.

In addition, if you need expensive tests and/or hospitalization, you pay those costs out of pocket until your deductible is met, and then pay an ongoing percentage of that cost, up to 30 percent. The cheapest plans have the highest deductible and the largest co-pay percentage; the more expensive plans have lower deductibles and lower co-pay percentages. This is where the health savings account comes in: You and your employer contribute to that account, and those contributions cover your qualified out-of-pocket expenses.

Health savings accounts
Brokers, banks and financial institutions typically administer HSAs for companies and consumers.

The IRS has established rules for HSAs, which provide that:

For Devon Herrick, a senior fellow at the National Center for Policy Analysis and author of several studies on consumer-directed health care, the fact that you can build up funds in your HSA and take them with you to another employer are major pluses.

"If you and your employer regularly contribute to an HSA and you don't use up these funds every year, by the time you are older and are likely to need more expensive tests and health care, you can have a healthy nest egg built up," he says. "If I invest the money in my HSA starting now -- in my mid-40s -- I could have $100,000 in it by the time I retire."

 
 
Next: "Consumer-directed health care savings still open to debate."
Page |1 | 2 | 3 |
 
 RESOURCES
Find out when rates hit your target
Deducting HSA contributions
Restrictions on health savings accounts
 TOP STORIES
No stories available
 

Compare Rates
NATIONAL OVERNIGHT AVERAGES
30 yr fixed mtg 4.45%
48 month new car loan 3.77%
1 yr CD 0.89%
Rates may include points
RELATED CALCULATORS
  How much life insurance do I need?  
  Calculate your payment on any loan  
  What will it take to save for a goal?  
VIEW ALL  
FINANCIAL LITERACY
Rev up your portfolio
with these tips and tricks.
- advertisement -
- advertisement -

About Bankrate | Privacy Policy/Your California Privacy Rights | Online Media Kit | Partnerships | Investor Relations | Press Room | Contact Us | Sitemap
NYSE: RATE | RSS Feeds |

* Mortgage rate may include points. See rate tables for details. Click here.
* To see the definition of overnight averages click here.

Bankrate.com ®, Copyright © 2014 Bankrate, Inc., All Rights Reserved, Terms of Use.