Posted on 09/18/2004 5:22:50 AM PDT by buzzyboop
Health savings accounts are a clever way to let you control your own medical costs, choose your own doctors and save money, too. And they're coming soon to an employer near you. Much of the credit goes to Rick Santorum, Pennsylvania's junior U.S. senator.
Santorum has been pushing HSAs and their older cousin, medical savings accounts, through Congress since 1991.
Q: What exactly is a health savings account?
A: It's similar to an IRA or an education savings account, which is a tax-free account. In other words, it's money you can divert from your paycheck, and your employer can put this money into an account, tax-free.
Q: Some people have called them "medical IRAs"?
A: That's essentially what it is. It creates an opportunity for you and your employer to put money aside for you to be spent tax-free as long as you are spending it on health care. When you combine this health savings account with a catastrophic insurance account, it is a way for you to insure yourself in a way that puts you in complete control of your health care purchases. That's the beauty of this health savings account. When you combine it with a high deductible insurance plan, your employer and you can combine together to provide a very, very effective way of providing coverage.
(Excerpt) Read more at pittsburghlive.com ...
bttt
The thing is, what we would consider an uncomfortably high deductible--like $5000--takes a long time to save up in a health savings account, and can be wiped out with just one visit to the emergency room. I study medical and patient financial records for a living and I find that very often a single ER visit of the kind that a family with young boys can generate a couple of times a year could easily wipe out even a generous health savings plan.
The insurance companies aren't going to give you a big discount for a big deductible because they know you're going to go through that deductible easily and they're still going to be holding the bag on a $20,000 outpatient surgery, a $45,000 C-section, or a $100,000 cardiac event. In other words, lopping your $5000 deductible off the final tab doesn't save them that much money in the long run.
Any insurance shopper who has to cover small boys isn't really interested in high deductible coverage. They need the max during their growing years.
A healthy single person in the 20s - losing the parents Blue Cross after graduating from university, etc, would be a logical candidate for the high deductible.
Many persons in the 45 million uninsured pool are in this category, and they would be building up the Health Savings Account during their healthy years.
It is like having car insurance, and deciding which dings, cracked glass etc are going to be paid for by insurance claim, and which by out-of-pocket expense.
Most outpatient surgeries don't cost $20,000 and C-sections don't cost $45,000.
I have the highest deductible so I don't have any premiums except what the employer pays --- if no one in the family goes to a doctor or hospital, that money adds up pretty fast. People who pay out $200 a month in premiums end up paying $2400 a year for health care they may not have used. In 5 years thats $12,000.
One way or another you pay -- either pay directly or have it taken out unless you choose to join that increasing portion of the population that has no insurance at all and still gets the best health care they could want.
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