Medical Savings Accounts

[dawgball]

We are looking to move to this method for our insurance.

Basically, the program is set up like this: You have similar insurance plans that are offered with regular programs except your deductible is much higher making your premiums much, much lower.

The advantage is that you take pre-tax dollars (there is a minimum and maximum allowed) and place them in a medical savings account. You use this money to pay for doctor's visits, prescriptions, etc. (things that normal insurance would cover). If you spend up to your deductible limit, then your insurance would kick in like normal and you would not be coming out of pocket each time. If you do not spend all of the money allotted, then you keep that in an IRA and can withdraw with no penalty (paying taxes on gains, of course) when you are 65. You can withdraw before then with further penalties.

I think this is a no-brainer for a healthy, single person. Where I am shaky on it is with my family being on the plan. Are there drawbacks to these plans that we should be aware of?

I am sure that there are cons, but are they outweighed by the pros?

 

[dr. freeze]

sounds good to me

i would try to get a very high deductable on anything and pay out of pocket right now unless you plan on havign kids if you are young

that should save you the most money

then make sure you haggle with every fee you get....this is what everyone needs to do to put the dollar back into place in medicine

 

[DOGS THAT BARK]

The best thing since sliced bread brother Dawg. The hardest thing about presenting these is everyone says "wheres the catch".
If possible have agent in your area get you rates for one that pays 100% instead of normal 80% after deuctible. Not much different in price.Would get quote from your state BC BS and would also recommend to get quote from John Alden. They have very good rates in Ky but don't know about your state.
With the 100% your out of pocket in net work would be 0 after your deductible. While currently in beginning stage most ofyour investment options will be fixed rates but later shortly funds will be available.
Works best on small groups where owners are primary employees--Law offices and Accountants are currently the leading markets in KY.

 

[THE KOD]

then make sure you haggle with every fee you get....this is what everyone needs to do to put the dollar back into place in medicine

...............................................................

dawg

And if you happen to get knocked in the head that requires 10 stitchs, make sure you shop around before you decide where to go.

That way you can figure out who is charging 150 for ten stitchs and who is charging 450.

Shouldn't be a problem if you don't bleed to death first. After all thats the way we Americans shop for burgers and haggle for houses. Can't be much differant for health care.

 

[dr. freeze]

right on

figure out what other places charge and then tell them that is all you are paying for your ER visit

 

[SixFive]

good deals. I've not had this exactly, but something similar through my job where pretax dollars go into an account and then get sent back to you after you have medical bills.

 

[DOGS THAT BARK]

Clarifiication if network provider is used.
you have $2,500 ded.
You go into Dr for yearly physical. Total charges for DR visit-lab work ect= $350 Bill is sent to ins co. They approve $120 per contract agreement with network Dr.You pay Dr $120 out of your savings acount-$120 goes toward your deductible--provider has to write off the $230 of charges over contract agreement.

 

[dawgball]

Thanks, everyone.

DR.--I have a 7 month old, so frequent doctor's visits could be a reality at anytime. I never go to doctor, and my wife just goes to the female doctor for check-ups.

DTB-- I didn't quite follow your last example. Are you saying that even though you have a policy that is supposed to cover 100% after deductible is met, you would still have to come out of pocket if they don't approve the charges?

Thanks again.

 

[djv]

The key is to have a job good enough to put the money there to stat with. We had this with ASD. However we had to use it up each year what we put in or lose it. Sounds like the fed's have changed the rule. Know all angles about this before you jump.

 

[DOGS THAT BARK]

No saying just opposite. If you stay in network the provider has to write off over charges.

another example on same scenerio--
++++++++++++++++++++++++++++++++++
Clarifiication if network provider is used.
you have $2,500 ded.
You go into Dr for yearly physical. Total charges for DR visit-lab work ect= $350 Bill is sent to ins co. They approve $120 per contract agreement with network Dr.You pay Dr $120 out of your savings acount-$120 goes toward your deductible--provider has to write off the $230 of charges over contract agreement
+++++++++++++++++++++++++++++++++++++++++++

I would have less out of pocket cost with $2,500 ded going to in network provider---than I would if I had a $250 ded and went out of network on above.

 

[dawgball]

Thanks for clearing that up, Dogs.

djv--I am a partner in a small company, and this is one thing that we are looking at doing for our employees (and ourselves) if it seems like a good fit. They have changed the laws recently about these.

Everything that I have read to this point seems to be positive. My inhibitions are caused by having a family (the only partner who is not single).

 

[ryson]

This is the first year that I have used one of these and so far so good. I have the use it or lose it plan. So I went in low (about 40 per mo.) and have already kicked myself for not doing more. I did not realize how much I spend on this stuff (not me the family). Figure this, one trip to the doc. $20 copay (kid has an infection) doc prescribed meds that are not covered by plan 45 bucks ($20 with normal meds) but typically 40 bucks a clip for copays. Most OTC things are covered as well, United health care has a card that is tied to your account and if you use that you do not have to submit anything and it's deducted from your balance. The thing too is in my bracket for every $20 I dropped on this plan it was only a $7 difference in my net net every two weeks. My only regret is I am not contributing more....it adds up quick when you have a family.

 

[blinksta3]

thank god i live in canada, this all sounds like a huge headache

 

[dawgball]

The plan that is looking best to us provides a debit card to the account that can only be used for medical purposes, so you don't have to file much (if any) on visits. This sounds great, but I wonder how long it will be before people are scamming this system for millions.

 

[DOGS THAT BARK]

Dawg When you go to doc(if in network) your card will not be debited UNTIL amount approved is negotiated. If bill is $300 and amount approved $180 you will be debited the $180 not the $300. Most companies offer debit card or check book from account. A word of advice if going checkbook. Most give you check book with only a few checks an charge exorbant fee for checks--you can order your checks from anywhere and save lots rather than ordering them through your HSA.

 

[gardenweasel]

that`s o.k. for the minor stuff.......as dawg indicated for the "healthy person"......unfortunately,not everyone stays healthy...


and the poor?....i`m not being contrary....just curious.....

what about catastrophic?.....what if you have heart failure?......kidney failure?.....need numerous,ridiculously expensive hospitalizations?......

what if you need a $25,000 pacemaker....and that`s just for the unit?.....dialysis?...

isn`t this why a collective system is the model for health care?

thanks..

 

[dawgball]

From what I understand, gw, after you meet your deductible your policy acts like a normal policy. So in case of catastrophic events, I would be responsible for payment up to my larger deductible (should be in my account from monthly additions) then my insurance would pick up the rest of the bill.

We will still be paying the same amount each month, but the money will be going to a different place. On our current insurance, it basically goes to the insurance company's pocket if we stay healthy. With the MSA, if we stay healthy the money is in an IRA that is growing from pre-tax dollars. If held there until the age of 65, there are no penalties for withdrawal.

 

[DOGS THAT BARK]

GW Catastrophic claims are paid same as regular insurance.
easiest example:
Single person has HSA plan with $2,500 ded then paid at 100%
The plan has 2 parts-the insurance aspect per above and a health savings account held in financial institute (Chase,Citi Bank ect)
Cost of above insurance plan in ky about $200/month for age 55 male.
Funding savings account (amount equal to deductible-$2,500 a year) would be an additional 208/per month. total cost $408/month.
In good year with just yearly physical one could consider the savings account a tax free-tax deductible savings account much like an Ira.
Now the inevitable bad year-Cancer--need operation-then chemo and radiation + before you never took prescription drugs now your month ** bill is $800 a month. You also need rehab. Total expense on year $260,000.
Your out of pocket cost if all services are in network-$2,500 then insurance picks up 100% including drugs--but alas we have $2,500 contibuted to savings account that year to apply to deductible so our net out of pocket is 0.

Now where this plan gets a little more complicated is on husband and wife and dependents. On husband and wife in a regular plan you have an individual deductible and family max deductible. On HSA plan if you had husband and wife both with $2,500 deductible you would have aggregate $5,000 deductible.By that I mean the two of you would be considered one-with $5,000 deductible.

You can reduce premium by having insurance plan that pays 80% of 1st $10,000 after ded rather than 100%. If you went that route on individual bad case scenerio you would have $2,000 out of pocket but if you had just one good year you would have ample amount in savings account to cover it. I generally do not offer the 80% choice as the 100% option avoids confusion and savings is not that much with the 80% option in many cases.

If this does not answer your question give me an example of age and # of people and I will try to give you relevant example.

 

[The Boys]

The Family deductible is $5150

 

[The Boys]

The following companies should have the HSA in your state.

American Medical Security
John Alden
Midwest Security
Golden Rule
Celtic
Fortis