The New Way To Lower The Cost Of Health Insurance

The New Way To Lower The Cost Of Health Insurance

It seems that every day there is an article about the rising cost of health insurance, the high number of people with no health insurance, and our system of financing medical care which is desperate and needs repair or replacement.
What goes unreported is that since January 1, 2004 there is a new way to finance medical expenses which utterly reduces the cost of medical insurance when compared to typic forms of health insurance. The name of this extreme new approach to financing health care is: Health Savings Accounts, or HSAs.
Health Savings Accounts combine a health insurance plan that will pay medical expenses after a patient has paid a few thousand dollars for medical care. A unique quality of these high up - front ( a “high deductible” in insurance - speak ) medical insurance plans is that a patient can open up an IRA - such tax favored savings account to bread the deductible. When sick the patient can withdraw money from the Health Savings Account without any tax sentence.
Like a dank day capital, a person on an HSA puts money aside in his / her own savings account in addition to paying a health insurance premium for insurance that will pay when a calamity happens. The HSA - relating medical insurance plans are less collectible than most other health insurance seeing they only introduce to pay for treatment after a patient has incurred several thousand dollars worth of medical bills.
The combined cost of the low cost medical insurance plan and the HSA savings component are likely the alike or less than the cost of a routine health insurance plan which begins paying medical bills immediately. The big savings in HSA plans are threefold:
1 ) The money invested in the HSA savings vehicle stays in the pocket of the insured person until used to pay talented medical expenses;
2 ) The money deposited into the HSA savings account is a deductible monetary worth from Federal income taxes – also many states concede income tax deductibility for HSA contributions; and,
3 ) An insured person pays less for health insurance to an insurance company.
Most people only care about the cost of health insurance when they have to pay the premium ( i. e., fish wrapper payment for the insurance. ) This applies to individuals and families who purchase their own policies and also companies which purchase health insurance on wellbeing of employees and their families. HSAs make the most shape for these people – being every dollar they save on premium stays in their lay up.
HSAs offer a unique side to employers: they can partially or entirely wampum the HSA savings account for employees covered by a consonant health insurance plan. Employees can also make tax deductible contributions to their own HSA account – up to the maximum allowed by the IRS.
So, an supervisor who may save $150 - $200 per month per employee could contribute $75 - $100 pre month to an employees HSA account, get a tax deduction and still spend less money in total for health insurance than they would spend on a conventional health insurance plan for their employees.
The employees comparable this arrangement because any money deposited into their HSA account become theirs immediately ( i. e., the vest immediately. ) The immediate full vesting for the employees also helps those companies with no retirement accounts ( e. g., 401k plan. )
Money in the HSA accounts can be used for non - medical expenses at age 65 with no tax impartiality. Many employees see this as an opportunity to accumulate a lot of money for their retirement – smug they stay healthy. If they become sick the money is there to pay for medical expenses.
HSAs – the new way to reduce the cost of financing medical care.