|Understanding high-deductible health plans
Plans differ widely on their options.
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."