- Feb 12, 2000
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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?
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?