How and Where To Get Health Insurance for Low Income Individuals

In the US, reading the statistics of Americans without their health insurance is startling. According to Huffington Post, this 2012, almost 50 million Americans are living without health plans. This is different from years ago. And why does this happen? This is because there are lots of Americans today that don’t have jobs or cannot find stable jobs that can let them have the luxury of paying for their health plans. In some families, paying for their home rent is even a problem. So, is it still possible to secure health insurance for low income families and individuals while in the midst of the crisis? Yes, it is still possible according to experts. We only need to know where to find it.

Health insurance for low income people are actually out there. Unfortunately, some of us know only few of them while other people don’t know how to tap them well. But as we have said, these resources are already here. So in this article we have gathered the most possible sources that we can tap to get almost the same benefits that low premium insurance plans can provide.

Below are the best possible options in place of securing health insurance for low income people.

COBRA. This is the Consolidated Omnibus Budget Reconciliation Act. If you are out of job, you can try applying for COBRA and if you will be eligible you can continue your previous companies’ health insurance through this process. This is better than finding a new health insurance plan but there is a possibility that you may pay higher premium for it.

Workers’ compensation. If you are employed and your job is risky, inquire from your employer if you are under the Workers’ Compensation program. You can have injury compensations if you get injured during your work.

Medicaid. Even if you are employed, better apply for Medicaid especially if you belong to the low income bracket. Medicaid can help you pay your health care expenses or some of it if you can’t afford to pay for it. Medicaid exists through federal and state partnership and was designed to help low income families, disabled and old people with their medical expenses. You can also apply your family to Medicaid because this is an opportunity that your state provides to those who can’t afford paying for regular health insurance plans.

Medicare. This is an option that comes from the government and being administered by the Social Security administration. If you are unemployed or don’t have a regular employment and with a family, you can try enrolling yourselves and your family to Medicare especially if you are getting Social Security benefits. For those who are sixty-five years old or even older, they are most eligible to be under the Medicare programs.

State High Risk State Insurance Pools. All of us do have health problems sometimes and unfortunately when we have pre-existing medical conditions we are usually denied coverage by health insurance companies. If you are denied of such privilege and did not qualify for COBRA while getting health insurance for low income individuals can also be a problem, you can rely on high risk state insurance pools. You can inquire from your city administrators or community hospitals where you can apply for this option. You may still pay premium for the plan but at least this can answer your medical cost even you have pre-existing health conditions.

Short Term Health Insurance Coverage. This is an appropriate option for low income individuals who don’t have regular jobs or just starting to work on their new jobs. This is much like individual insurance policies but in this option you will only be under the coverage for short period of time. You only pay low premium with this one and while you are at it you can find time examining the viability of this insurance company if this could be the right choice for your long-term insurance coverage.

Group Health Insurance. If you are a member of an organization and without the health insurance, you can encourage your group to apply for a group insurance. With this type of insurance, you can choose from various insurance options how you want to be covered. The nice thing about being insured as a group is that you pay lower rates because your premium is scattered among your members. You may not get large benefit from it like what individual insurance plans can provide but at least you are also secured and have something to rely on. If you don’t have a group you can also search for organizations online that accept individuals for their group health insurance.

Group Sharing On Health Expenses. Basically, this is not a type of health insurance for low income people but it is a logical option for those who want financial support during medical crisis. This system works in simple process. You form a group and pool your money and deposit this money to the bank so that you are your own insurance health group. When one of you needed the expenses due to health concerns, the money can be used to support the individual’s medical expenses and he pays when he can be able to work. Religious groups usually do this but this can only be viable if there lots of people who will provide contributions.

With all these given options, providing health insurance for low income individuals is always possible. If all of us would realize the things we can get from these options, we don’t need to worry so much anymore. Getting confined in the hospital or treated with serious injuries without the health insurance is simply unimaginable so the only thing that we can do four ourselves is to rely on these options which equate the benefits provided by health insurance for low income people.

LASIT innovative products and materials such as laser etching metal on http://www.lasitlaser.com/laser-engraving-machine-metals-alloys/ are becoming more and more popular in the medical industry. Get interested? Contact us!
Posted in Uncategorized | Comments Off on How and Where To Get Health Insurance for Low Income Individuals

Buying Individual Health Insurance: 3 Essential Tips From a Health Insurance Specialist

When you’re buying individual health insurance, you’ll probably get overwhelmed by the prices and options of health plans online. Health insurance is now one of the more expensive items in the budgets of many people, but it can also be one of the best decisions you make if you have some know-how selecting the right health plan for you and your family. Here I will give you the 3 Essential Tips that I advise my clients to use when purchasing individual health coverage.

Tip 1: Do not take health insurance advice from someone that is totally unqualified to give you this advice!!

I cannot stress this enough. It amazes me how many sensible people take advice about what health insurance to choose from people who are totally unqualified to give you this critical advice. For example, when I see health insurance messes, (which I see virtually every day) and I ask where they got their health plan information, I inevitably hear things like: “My brother-in- law told me to choose this health plan, he used to work at the hospital.” or “I read an article that says this is the best plan available.” And so on. Everyone’s got an opinion about what health plan you should choose. Just because they are your relative, or involved in some area of health care totally unrelated to insurance, does not mean they know the answers to your individual needs and questions! Work with an insurance specialist BEFORE the problems come up! You have no idea how many clients I have worked with come to me after they chose a health plan online and then have an insurance coverage issue and expect me to fix it, I want to tell them: you should have come to me for help before! Most insurance specialists get paid through insurance carriers, so their services are free to you. USE THEM!!

Tip 2: Determine your actual needs.

The three things to keep in mind when determining your needs are: budget, patterns of doctor and hospital visits, and prescription drug usage. Ask yourself these questions: How frequently do you visit your doctor? Do you go for checkups only or do you go for sick visits? How many times have you been in the hospital in the past 2 years? Do you take regular prescriptions? What are they? Generic or Brands? This is another area where most of my clients neglect. It is not possible to have maximum coverage in all of these areas in any affordable way, maximum coverage for the doctor and hospital plus prescriptions leaves a dent in the budget. However, most health insurance plans offer more than one version of the same plan. For example, say you have “health plan A” that offers maximum coverage for the doctor, maximum coverage for the hospital, and maximum coverage for your prescription drugs. But “health plan A” costs the same as your mortgage. The good news is “Health Plan A” most likely also has customizable options, meaning if after analyzing your needs, you discover that you rarely visit a hospital, you could change “health plan A’ s” hospital coverage to moderate or even minimal which will bring down the premium a great deal. If these options are confusing to you, again, a health insurance specialist will be able to help you. They are already aware of “health plan A’ s” customizable features and can match your needs to the appropriate version of “health plan A”. A health insurance specialist also has access to versions of health plans that aren’t available as options to the average consumer buying health insurance online.

Tip 3: Resist the urge to over-insure!!

After you’ve analyzed your needs, resist the urge to over-insure! One of the most common health insurance messes I see is over-insurance. People think that if they have maximum coverage for doctors, hospitals, and prescriptions, they have “good” insurance. The truth is, most people who will be approved for individual health insurance won’t need all this coverage. Two things I advise my clients to be aware of: Health Care Reform and Stop-Loss. First, Health Care Reform allows for preventive care services to be covered at 100%. For example, if you only get checkups, why enroll in the plan with 100% doctor’s visit coverage? Enroll in the plan with a lower premium and pay a $10 copay for your sick visit. The difference in premium with this small detail is $100’s of dollars! Furthermore, some of these “maximum coverage” health insurance plans exclude things like pregnancy. The last thing you want to do is pay a small fortune for “good” health insurance only to discover it won’t cover something you need it for! Second, most health insurance plans have a stop-loss built into them which basically states that when your out-of-pocket costs reach a certain amount, the plan will cover you at 100% for all services. And you don’t need the “maximum coverage” plan for this benefit. Your health insurance specialist can even customize this stop-loss amount!

Then, select your plan after following My 3 Essential Tips:

1. Do not take health insurance advice from someone unqualified to offer this advice. Seek a health insurance specialist, they have studied and are licensed to offer this advice and they’re free to you. USE THEM!!

2. Consider your actual needs. Ask yourself questions so you know what your specific health plan needs are, that way you can make sure you select a plan that meets them. After all, if you don’t know what you actually need in a plan, how will you know if you’ve come across the right fit?

3. Resist the urge to over-insure! Health Care Reform has changed how many plans work and you may be able to receive ample or superlative coverage without over-insuring. And most importantly, without the hefty premiums!

There you have it, online health insurance shoppers! I hope this was helpful!

Posted in Uncategorized | Comments Off on Buying Individual Health Insurance: 3 Essential Tips From a Health Insurance Specialist

All About Affordable Health Insurance Plans

While consumers search for affordable health insurance, they have price in their mind as the top priority. A general conception among the consumers is that cheap health plans should not be costly-the cheapest health plan available in the market is their target. However, this approach is not good. Sometimes, paying for a cheap health insurance plan but still not getting the required level of coverage results only in wastage of money.

With the implementation of the affordable care act, the reach of affordable health plans is set to increase. Or at least, this is what is believed to be the objective of healthcare reforms. However, lots of consumers are still in confusion about how things would work. In this article, we will discuss some detailed options that consumers can try while looking to buy affordable health plans.

To get a hand on affordable health insurance plans, consumers need to take of certain things. First among them is about knowing the options in the particular state of the residence. There are lots of state and federal government-run programs that could be suitable for consumers. Knowing the options is pretty important. Next would be to understand the terms and conditions of all the programs and check the eligibility criteria for each one of them. Further, consumers should know their rights after the implementation of healthcare reforms, and something within a few days, they may qualify for a particular program or could be allowed to avail a particular health insurance plan. If consumers take care of these steps, there is no reason why consumers can’t land on an affordable health plan that could cater to the medical care needs.

Let’s discuss some options related to affordable health insurance plans state-wise:

State-run affordable health insurance programs in California

While considering California, there are three affordable health insurance plans that are run by the state government. Consumers can surely get benefitted by these if they are eligible for the benefits.

• Major Risk Medical Insurance Program (MRMIP)

This program is a very handy one offering limited health benefits to California residents. If consumers are unable to purchase health plans due to a preexisting medical condition, they can see if they qualify for this program and get benefits.

• Healthy Families Program

Healthy Families Program offers Californians with low cost health, dental, and vision coverage. This is mainly geared to children whose parents earn too much to qualify for public assistance. This program is administered by MRMIP.

• Access for Infants and Mothers Program (AIM)

Access for Infants and Mothers Program provides prenatal and preventive care for pregnant women having low income in California. It is administered by a five-person board that has established a comprehensive benefits package that includes both inpatient and outpatient care for program enrollees.

Some facts about affordable health insurance in Florida

While talking about affordable health insurance options in Florida, consumers can think about below mentioned options:

• Floridians who lost employer’s group health insurance may qualify for COBRA continuation coverage in Florida. At the same time, Floridians, who lost group health insurance due to involuntary termination of employment occurring between September 1, 2008 and December 31, 2009 may qualify for a federal tax credit. This credit helps in paying COBRA or state continuation coverage premiums for up to nine months.

• Floridians who had been uninsured for 6 months may be eligible to buy a limited health benefit plan through Cover Florida.

• Florida Medicaid program can be tried by Floridians having low or modest household income. Through this program, pregnant women, families with children, medically needy, elderly, and disabled individuals may get help.

• Florida KidCare program can help the Floridian children under the age of 19 years and not eligible for Medicaid and currently uninsured or underinsured.

• A federal tax credit to help pay for new health coverage to Floridians who lost their health coverage but are receiving benefits from the Trade Adjustment Assistance (TAA) Program. This credit is called the Health Coverage Tax Credit (HCTC). At the same time, Floridians who are retirees and are aged 55-65 and are receiving pension benefits from Pension Benefit Guarantee Corporation (PBGC), may qualify for the HCTC.

Some facts about affordable health insurance in Virginia

While talking about affordable health insurance options in Virginia, consumers need to consider their rights:

• Virginians who lost their employer’s group health insurance may apply for COBRA or state continuation coverage in Virginia.

• Virginians must note that they have the right to buy individual health plans from either Anthem Blue Cross Blue Shield or CareFirst Blue Cross Blue Shield.

• Virginia Medicaid program helps Virginians having low or modest household income may qualify for free or subsidized health coverage. Through this program, pregnant women, families with children, and elderly and disabled individuals are helped.

• Family Access to Medical Insurance Security (FAMIS) helps Virginian children under the age of 18 years having no health insurance.

• In Virginia, the Every Woman’s Life Program offers free breast and cervical cancer screening. Through this program, if women are diagnosed with cancer, they may be eligible for treatment through the Virginia Medicaid Program.

Some facts about affordable health insurance in Texas

While talking about affordable health insurance options in Texas, consumers need to consider their rights:

• Texans who have group insurance in Texas cannot be denied or limited in terms of coverage, nor can be required to pay more, because of the health status. Further, Texans having group health insurance can’t have exclusion of pre-existing conditions.

• In Texas, insurers cannot drop Texans off coverage when they get sick. At the same time, Texans who lost their group health insurance but are HIPAA eligible may apply for COBRA or state continuation coverage in Texas.

• Texas Medicaid program helps Texans having low or modest household income may qualify for free or subsidized health coverage. Through this program, pregnant women, families with children, elderly and disabled individuals are helped. At the same time, if a woman is diagnosed with breast or cervical cancer, she may be eligible for medical care through Medicaid.

• The Texas Children’s Health Insurance Program (CHIP) offers subsidized health coverage for certain uninsured children. Further children in Texas can stay in their parent’s health insurance policy as dependents till the age of 26 years. This clause has been implemented by the healthcare reforms.

• The Texas Breast and Cervical Cancer Control program offers free cancer screening for qualified residents. If a woman is diagnosed with breast or cervical cancer through this program, she may qualify for medical care through Medicaid.

Like this, consumers need to consider state-wise options when they search for affordable health coverage. It goes without saying that shopping around and getting oneself well-equipped with necessary information is pretty much important to make sure consumers have the right kind of health plans.

Posted in Uncategorized | Comments Off on All About Affordable Health Insurance Plans

Small Business Health Insurance – The Best Policy Is A Great Agent

I have been a health insurance broker for over a decade and every day I read more and more “horror” stories that are posted on the Internet regarding health insurance companies not paying claims, refusing to cover specific illnesses and physicians not getting reimbursed for medical services. Unfortunately, insurance companies are driven by profits, not people (albeit they need people to make profits). If the insurance company can find a legal reason not to pay a claim, chances are they will find it, and you the consumer will suffer. However, what most people fail to realize is that there are very few “loopholes” in an insurance policy that give the insurance company an unfair advantage over the consumer. In fact, insurance companies go to great lengths to detail the limitations of their coverage by giving the policy holders 10-days (a 10-day free look period) to review their policy. Unfortunately, most people put their insurance cards in their wallet and place their policy in a drawer or filing cabinet during their 10-day free look and it usually isn’t until they receive a “denial” letter from the insurance company that they take their policy out to really read through it.

The majority of people, who buy their own health insurance, rely heavily on the insurance agent selling the policy to explain the plan’s coverage and benefits. This being the case, many individuals who purchase their own health insurance plan can tell you very little about their plan, other than, what they pay in premiums and how much they have to pay to satisfy their deductible.

For many consumers, purchasing a health insurance policy on their own can be an enormous undertaking. Purchasing a health insurance policy is not like buying a car, in that, the buyer knows that the engine and transmission are standard, and that power windows are optional. A health insurance plan is much more ambiguous, and it is often very difficult for the consumer to determine what type of coverage is standard and what other benefits are optional. In my opinion, this is the primary reason that most policy holders don’t realize that they do not have coverage for a specific medical treatment until they receive a large bill from the hospital stating that “benefits were denied.”

Sure, we all complain about insurance companies, but we do know that they serve a “necessary evil.” And, even though purchasing health insurance may be a frustrating, daunting and time consuming task, there are certain things that you can do as a consumer to ensure that you are purchasing the type of health insurance coverage you really need at a fair price.

Dealing with small business owners and the self-employed market, I have come to the realization that it is extremely difficult for people to distinguish between the type of health insurance coverage that they “want” and the benefits they really “need.” Recently, I have read various comments on different Blogs advocating health plans that offer 100% coverage (no deductible and no-coinsurance) and, although I agree that those types of plans have a great “curb appeal,” I can tell you from personal experience that these plans are not for everyone. Do 100% health plans offer the policy holder greater peace of mind? Probably. But is a 100% health insurance plan something that most consumers really need? Probably not! In my professional opinion, when you purchase a health insurance plan, you must achieve a balance between four important variables; wants, needs, risk and price. Just like you would do if you were purchasing options for a new car, you have to weigh all these variables before you spend your money. If you are healthy, take no medications and rarely go to the doctor, do you really need a 100% plan with a $5 co-payment for prescription drugs if it costs you $300 dollars more a month?

Is it worth $200 more a month to have a $250 deductible and a $20 brand name/$10 generic Rx co-pay versus an 80/20 plan with a $2,500 deductible that also offers a $20 brand name/$10generic co-pay after you pay a once a year $100 Rx deductible? Wouldn’t the 80/20 plan still offer you adequate coverage? Don’t you think it would be better to put that extra $200 ($2,400 per year) in your bank account, just in case you may have to pay your $2,500 deductible or buy a $12 Amoxicillin prescription? Isn’t it wiser to keep your hard-earned money rather than pay higher premiums to an insurance company?

Yes, there are many ways you can keep more of the money that you would normally give to an insurance company in the form of higher monthly premiums. For example, the federal government encourages consumers to purchase H.S.A. (Health Savings Account) qualified H.D.H.P.’s (High Deductible Health Plans) so they have more control over how their health care dollars are spent. Consumers who purchase an HSA Qualified H.D.H.P. can put extra money aside each year in an interest bearing account so they can use that money to pay for out-of-pocket medical expenses. Even procedures that are not normally covered by insurance companies, like Lasik eye surgery, orthodontics, and alternative medicines become 100% tax deductible. If there are no claims that year the money that was deposited into the tax deferred H.S.A can be rolled over to the next year earning an even higher rate of interest. If there are no significant claims for several years (as is often the case) the insured ends up building a sizeable account that enjoys similar tax benefits as a traditional I.R.A. Most H.S.A. administrators now offer thousands of no load mutual funds to transfer your H.S.A. funds into so you can potentially earn an even higher rate of interest.

In my experience, I believe that individuals who purchase their health plan based on wants rather than needs feel the most defrauded or “ripped-off” by their insurance company and/or insurance agent. In fact, I hear almost identical comments from almost every business owner that I speak to. Comments, such as, “I have to run my business, I don’t have time to be sick! “I think I have gone to the doctor 2 times in the last 5 years” and “My insurance company keeps raising my rates and I don’t even use my insurance!” As a business owner myself, I can understand their frustration. So, is there a simple formula that everyone can follow to make health insurance buying easier? Yes! Become an INFORMED consumer.

Every time I contact a prospective client or call one of my client referrals, I ask a handful of specific questions that directly relate to the policy that particular individual currently has in their filing cabinet or dresser drawer. You know the policy that they bought to protect them from having to file bankruptcy due to medical debt. That policy they purchased to cover that $500,000 life-saving organ transplant or those 40 chemotherapy treatments that they may have to undergo if they are diagnosed with cancer.

So what do you think happens almost 100% of the time when I ask these individuals “BASIC” questions about their health insurance policy? They do not know the answers! The following is a list of 10 questions that I frequently ask a prospective health insurance client. Let’s see how many YOU can answer without looking at your policy.

1. What Insurance Company are you insured with and what is the name of your health insurance plan? (e.g. Blue Cross Blue Shield-“Basic Blue”)

2. What is your calendar year deductible and would you have to pay a separate deductible for each family member if everyone in your family became ill at the same time? (e.g. The majority of health plans have a per person yearly deductible, for example, $250, $500, $1,000, or $2,500. However, some plans will only require you to pay a 2 person maximum deductible each year, even if everyone in your family needed extensive medical care.)

3. What is your coinsurance percentage and what dollar amount (stop loss) it is based on? (e.g. A good plan with 80/20 coverage means you pay 20% of some dollar amount. This dollar amount is also known as a stop loss and can vary based on the type of policy you purchase. Stop losses can be as little as $5,000 or $10,000 or as much as $20,000 or there are some policies on the market that have NO stop loss dollar amount.)

4. What is your maximum out of pocket expense per year? (e.g. All deductibles plus all coinsurance percentages plus all applicable access fees or other fees)

5. What is the Lifetime maximum benefit the insurance company will pay if you become seriously ill and does your plan have any “per illness” maximums or caps? (e.g. Some plans may have a $5 million lifetime maximum, but may have a maximum benefit cap of $100,000 per illness. This means that you would have to develop many separate and unrelated life-threatening illnesses costing $100,000 or less to qualify for $5 million of lifetime coverage.)

6. Is your plan a schedule plan, in that it only pays a certain amount for a specific list of procedures? (e.g., Mega Life & Health & Midwest National Life, endorsed by the National Association of the Self-Employed, N.A.S.E. is known for endorsing schedule plans) 7. Does your plan have doctor co-pays and are you limited to a certain number of doctor co-pay visits per year? (e.g. Many plans have a limit of how many times you go to the doctor per year for a co-pay and, quite often the limit is 2-4 visits.)

8. Does your plan offer prescription drug coverage and if it does, do you pay a co-pay for your prescriptions or do you have to meet a separate drug deductible before you receive any benefits and/or do you just have a discount prescription card only? (e.g. Some plans offer you prescription benefits right away, other plans require that you pay a separate drug deductible before you can receive prescription medication for a co-pay. Today, many plans offer no co-pay options and only provide you with a discount prescription card that gives you a 10-20% discount on all prescription medications).

9. Does your plan have any reduction in benefits for organ transplants and if so, what is the maximum your plan will pay if you need an organ transplant? (e.g. Some plans only pay a $100,000 maximum benefit for organ transplants for a procedure that actually costs $350-$500K and this $100,000 maximum may also include reimbursement for expensive anti-rejection medications that must be taken after a transplant. If this is the case, you will often have to pay for all anti-rejection medications out of pocket).

10. Do you have to pay a separate deductible or “access fee” for each hospital admission or for each emergency room visit? (e.g. Some plans, like the Assurant Health’s “CoreMed” plan have a separate $750 hospital admission fee that you pay for the first 3 days you are in the hospital. This fee is in addition to your plan deductible. Also, many plans have benefit “caps” or “access fees” for out-patient services, such as, physical therapy, speech therapy, chemotherapy, radiation therapy, etc. Benefit “caps” could be as little as $500 for each out-patient treatment, leaving you a bill for the remaining balance. Access fees are additional fees that you pay per treatment. For example, for each outpatient chemotherapy treatment, you may be required to pay a $250 “access fee” per treatment. So for 40 chemotherapy treatments, you would have to pay 40 x $250 = $10,000. Again, these fees would be charged in addition to your plan deductible).

Posted in Uncategorized | Comments Off on Small Business Health Insurance – The Best Policy Is A Great Agent

Health Savings Accounts – An American Innovation in Health Insurance

INTRODUCTON – The term “health insurance” is commonly used in the United States to describe any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance or a non-insurance social welfare program funded by the government. Synonyms for this usage include “health coverage,” “health care coverage” and “health benefits” and “medical insurance.” In a more technical sense, the term is used to describe any form of insurance that provides protection against injury or illness.

In America, the health insurance industry has changed rapidly during the last few decades. In the 1970’s most people who had health insurance had indemnity insurance. Indemnity insurance is often called fee-forservice. It is the traditional health insurance in which the medical provider (usually a doctor or hospital) is paid a fee for each service provided to the patient covered under the policy. An important category associated with the indemnity plans is that of consumer driven health care (CDHC). Consumer-directed health plans allow individuals and families to have greater control over their health care, including when and how they access care, what types of care they receive and how much they spend on health care services.

These plans are however associated with higher deductibles that the insured have to pay from their pocket before they can claim insurance money. Consumer driven health care plans include Health Reimbursement Plans (HRAs), Flexible Spending Accounts (FSAs), high deductible health plans (HDHps), Archer Medical Savings Accounts (MSAs) and Health Savings Accounts (HSAs). Of these, the Health Savings Accounts are the most recent and they have witnessed rapid growth during the last decade.

WHAT IS A HEALTH SAVINGS ACCOUNT?

A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States. The funds contributed to the account are not subject to federal income tax at the time of deposit. These may be used to pay for qualified medical expenses at any time without federal tax liability.

Another feature is that the funds contributed to Health Savings Account roll over and accumulate year over year if not spent. These can be withdrawn by the employees at the time of retirement without any tax liabilities. Withdrawals for qualified expenses and interest earned are also not subject to federal income taxes. According to the U.S. Treasury Office, ‘A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care.

HSA’s enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.’ Thus the Health Savings Account is an effort to increase the efficiency of the American health care system and to encourage people to be more responsible and prudent towards their health care needs. It falls in the category of consumer driven health care plans.

Origin of Health Savings Account

The Health Savings Account was established under the Medicare Prescription Drug, Improvement, and Modernization Act passed by the U.S. Congress in June 2003, by the Senate in July 2003 and signed by President Bush on December 8, 2003.

Eligibility –

The following individuals are eligible to open a Health Savings Account –

– Those who are covered by a High Deductible Health Plan (HDHP).
– Those not covered by other health insurance plans.
– Those not enrolled in Medicare4.

Also there are no income limits on who may contribute to an HAS and there is no requirement of having earned income to contribute to an HAS. However HAS’s can’t be set up by those who are dependent on someone else’s tax return. Also HSA’s cannot be set up independently by children.

What is a High Deductible Health plan (HDHP)?

Enrollment in a High Deductible Health Plan (HDHP) is a necessary qualification for anyone wishing to open a Health Savings Account. In fact the HDHPs got a boost by the Medicare Modernization Act which introduced the HSAs. A High Deductible Health Plan is a health insurance plan which has a certain deductible threshold. This limit must be crossed before the insured person can claim insurance money. It does not cover first dollar medical expenses. So an individual has to himself pay the initial expenses that are called out-of-pocket costs.

In a number of HDHPs costs of immunization and preventive health care are excluded from the deductible which means that the individual is reimbursed for them. HDHPs can be taken both by individuals (self employed as well as employed) and employers. In 2008, HDHPs are being offered by insurance companies in America with deductibles ranging from a minimum of $1,100 for Self and $2,200 for Self and Family coverage. The maximum amount out-of-pocket limits for HDHPs is $5,600 for self and $11,200 for Self and Family enrollment. These deductible limits are called IRS limits as they are set by the Internal Revenue Service (IRS). In HDHPs the relation between the deductibles and the premium paid by the insured is inversely propotional i.e. higher the deductible, lower the premium and vice versa. The major purported advantages of HDHPs are that they will a) lower health care costs by causing patients to be more cost-conscious, and b) make insurance premiums more affordable for the uninsured. The logic is that when the patients are fully covered (i.e. have health plans with low deductibles), they tend to be less health conscious and also less cost conscious when going for treatment.

Opening a Health Savings Account

An individual can sign up for HSAs with banks, credit unions, insurance companies and other approved companies. However not all insurance companies offer HSAqualified health insurance plans so it is important to use an insurance company that offers this type of qualified insurance plan. The employer may also set up a plan for the employees. However, the account is always owned by the individual. Direct online enrollment in HSA-qualified health insurance is available in all states except Hawaii, Massachusetts, Minnesota, New Jersey, New York, Rhode Island, Vermont and Washington.

Contributions to the Health Savings Account

Contributions to HSAs can be made by an individual who owns the account, by an employer or by any other person. When made by the employer, the contribution is not included in the income of the employee. When made by an employee, it is treated as exempted from federal tax. For 2008, the maximum amount that can be contributed (and deducted) to an HSA from all sources is:
$2,900 (self-only coverage)
$5,800 (family coverage)

These limits are set by the U.S. Congress through statutes and they are indexed annually for inflation. For individuals above 55 years of age, there is a special catch up provision that allows them to deposit additional $800 for 2008 and $900 for 2009. The actual maximum amount an individual can contribute also depends on the number of months he is covered by an HDHP (pro-rated basis) as of the first day of a month. For eg If you have family HDHP coverage from January 1,2008 until June 30, 2008, then cease having HDHP coverage, you are allowed an HSA contribution of 6/12 of $5,800, or $2,900 for 2008. If you have family HDHP coverage from January 1,2008 until June 30, 2008, and have self-only HDHP coverage from July 1, 2008 to December 31, 2008, you are allowed an HSA contribution of 6/12 x $5,800 plus 6/12 of $2,900, or $4,350 for 2008. If an individual opens an HDHP on the first day of a month, then he can contribute to HSA on the first day itself. However, if he/she opens an account on any other day than the first, then he can contribute to the HSA from the next month onwards. Contributions can be made as late as April 15 of the following year. Contributions to the HSA in excess of the contribution limits must be withdrawn by the individual or be subject to an excise tax. The individual must pay income tax on the excess withdrawn amount.

Contributions by the Employer

The employer can make contributions to the employee’s HAS account under a salary reduction plan known as Section 125 plan. It is also called a cafeteria plan. The contributions made under the cafeteria plan are made on a pre-tax basis i.e. they are excluded from the employee’s income. The employer must make the contribution on a comparable basis. Comparable contributions are contributions to all HSAs of an employer which are 1) the same amount or 2) the same percentage of the annual deductible. However, part time employees who work for less than 30 hours a week can be treated separately. The employer can also categorize employees into those who opt for self coverage only and those who opt for a family coverage. The employer can automatically make contributions to the HSAs on the behalf of the employee unless the employee specifically chooses not to have such contributions by the employer.

Withdrawals from the HSAs

The HSA is owned by the employee and he/she can make qualified expenses from it whenever required. He/She also decides how much to contribute to it, how much to withdraw for qualified expenses, which company will hold the account and what type of investments will be made to grow the account. Another feature is that the funds remain in the account and role over from year to year. There are no use it or lose it rules. The HSA participants do not have to obtain advance approval from their HSA trustee or their medical insurer to withdraw funds, and the funds are not subject to income taxation if made for ‘qualified medical expenses’. Qualified medical expenses include costs for services and items covered by the health plan but subject to cost sharing such as a deductible and coinsurance, or co-payments, as well as many other expenses not covered under medical plans, such as dental, vision and chiropractic care; durable medical equipment such as eyeglasses and hearing aids; and transportation expenses related to medical care. Nonprescription, over-the-counter medications are also eligible. However, qualified medical expense must be incurred on or after the HSA was established.

Tax free distributions can be taken from the HSA for the qualified medical expenses of the person covered by the HDHP, the spouse (even if not covered) of the individual and any dependent (even if not covered) of the individual.12 The HSA account can also be used to pay previous year’s qualified expenses subject to the condition that those expenses were incurred after the HSA was set up. The individual must preserve the receipts for expenses met from the HSA as they may be needed to prove that the withdrawals from the HSA were made for qualified medical expenses and not otherwise used. Also the individual may have to produce the receipts before the insurance company to prove that the deductible limit was met. If a withdrawal is made for unqualified medical expenses, then the amount withdrawn is considered taxable (it is added to the individuals income) and is also subject to an additional 10 percent penalty. Normally the money also cannot be used for paying medical insurance premiums. However, in certain circumstances, exceptions are allowed.

These are –

1) to pay for any health plan coverage while receiving federal or state unemployment benefits.
2) COBRA continuation coverage after leaving employment with a company that offers health insurance coverage.
3) Qualified long-term care insurance.
4) Medicare premiums and out-of-pocket expenses, including deductibles, co-pays, and coinsurance for: Part A (hospital and inpatient services), Part B (physician and outpatient services), Part C (Medicare HMO and PPO plans) and Part D (prescription drugs).

However, if an individual dies, becomes disabled or reaches the age of 65, then withdrawals from the Health Savings Account are considered exempted from income tax and additional 10 percent penalty irrespective of the purpose for which those withdrawals are made. There are different methods through which funds can be withdrawn from the HSAs. Some HSAs provide account holders with debit cards, some with cheques and some have options for a reimbursement process similar to medical insurance.

Growth of HSAs

Ever since the Health Savings Accounts came into being in January 2004, there has been a phenomenal growth in their numbers. From around 1 million enrollees in March 2005, the number has grown to 6.1 million enrollees in January 2008.14 This represents an increase of 1.6 million since January 2007, 2.9 million since January 2006 and 5.1 million since March 2005. This growth has been visible across all segments. However, the growth in large groups and small groups has been much higher than in the individual category. According to the projections made by the U.S. Treasury Department, the number of HSA policy holders will increase to 14 million by 2010. These 14 million policies will provide cover to 25 to 30 million U.S. citizens.

In the Individual Market, 1.5 million people were covered by HSA/HDHPs purchased as on January 2008. Based on the number of covered lives, 27 percent of newly purchased individual policies (defined as those purchased during the most recent full month or quarter) were enrolled in HSA/HDHP coverage. In the small group market, enrollment stood at 1.8 million as of January 2008. In this group 31 percent of all new enrollments were in the HSA/HDHP category. The large group category had the largest enrollment with 2.8 million enrollees as of January 2008. In this category, six percent of all new enrollments were in the HSA/HDHP category.

Benefits of HSAs

The proponents of HSAs envisage a number of benefits from them. First and foremost it is believed that as they have a high deductible threshold, the insured will be more health conscious. Also they will be more cost conscious. The high deductibles will encourage people to be more careful about their health and health care expenses and will make them shop for bargains and be more vigilant against excesses in the health care industry. This, it is believed, will reduce the growing cost of health care and increase the efficiency of the health care system in the United States. HSA-eligible plans typically provide enrollee decision support tools that include, to some extent, information on the cost of health care services and the quality of health care providers. Experts suggest that reliable information about the cost of particular health care services and the quality of specific health care providers would help enrollees become more actively engaged in making health care purchasing decisions. These tools may be provided by health insurance carriers to all health insurance plan enrollees, but are likely to be more important to enrollees of HSA-eligible plans who have a greater financial incentive to make informed decisions about the quality and costs of health care providers and services.

It is believed that lower premiums associated with HSAs/HDHPs will enable more people to enroll for medical insurance. This will mean that lower income groups who do not have access to medicare will be able to open HSAs. No doubt higher deductibles are associated with HSA eligible HDHPs, but it is estimated that tax savings under HSAs and lower premiums will make them less expensive than other insurance plans. The funds put in the HSA can be rolled over from year to year. There are no use it or lose it rules. This leads to a growth in savings of the account holder. The funds can be accumulated tax free for future medical expenses if the holder so desires. Also the savings in the HSA can be grown through investments.

The nature of such investments is decided by the insured. The earnings on savings in the HSA are also exempt from income tax. The holder can withdraw his savings in the HSA after turning 65 years old without paying any taxes or penalties. The account holder has complete control over his/her account. He/She is the owner of the account right from its inception. A person can withdraw money as and when required without any gatekeeper. Also the owner decides how much to put in his/her account, how much to spend and how much to save for the future. The HSAs are portable in nature. This means that if the holder changes his/her job, becomes unemployed or moves to another location, he/she can still retain the account.

Also if the account holder so desires he can transfer his Health Saving Account from one managing agency to another. Thus portability is an advantage of HSAs. Another advantage is that most HSA plans provide first-dollar coverage for preventive care. This is true of virtually all HSA plans offered by large employers and over 95% of the plans offered by small employers. It was also true of over half (59%) of the plans which were purchased by individuals.

Posted in Uncategorized | Comments Off on Health Savings Accounts – An American Innovation in Health Insurance