An Advantage of High Deductible Plans and Health Savings
Learning about High Deductible Plans and Health Savings Accounts is pretty easy. There are a huge amount of advantages with this policy if you are young and have a high paying job.
High Deductible Plans and Health Savings Accounts are a few of the better options available for both low-income and high-income groups.
High Deductible Plans and Health Savings Accounts: An option for low-income families?
The basics are simple. If you are a relatively new company with a large young workforce, then this insurance plan offers the employers a chance to save money on premiums while still offering employees a great option. In 2006, President George Bush proposed a new bevy of health care reforms where he increased the advantages to the employers and employees who enrolled in the HDP or High Deductible Plans and HSA or the Health Savings Accounts. And that has these health care reforms seem more attractive.
But what do they mean?
Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs), are part of a set of health care plans called as the "consumer-driven health plans" which offer both the insurer and the employer a cost saving alternative. The High Deductible Health Plans are geared to providing all types of basic preventive care but everything else the patient has to pay out of his own pocket. This process continues till a minimum amount set by the company is reached. Once the billing amount crosses the limit then the insurance company has to shell out the cost. In 2007, the minimum amount was set at about $1,100.
What is the advantage to the patient?
Once the patient opts for this policy they also have to open up a Health Savings Account where they are supposed to set money aside for all medical expenses which they might incur. This account is tax-free and has no limit on the amount of deposit that the patient is doing in to the account. The account belongs solely to the account holder but is to be used only for health purposes to pay off the HDP deductible and any medical expenses. Recently a new tweak to the HDP plan allowed a part of the premium to be also moved in to the account giving an additional benefit.
There are also higher deductibles which result in lower premiums coming down the pike to the employer and offer a much better advantage all around. Even if you do not use the money in your HSA account, you are offered the option of reinvesting the money for your benefit. The money accrues interest both ways and you are allowed to withdraw it for medical reasons without tax. If you are not using it for medical expenses, you are allowed to use it with a tax deduction and a 10% penalty. Another psychologically advantage that directs comes across is that employees start taking better care of themselves as they realize the cost of health care.
But the problem arises as most people are not really aware of the benefits of the High Deductible Plans and Health Savings Accounts. As they are paying more out of their pocket for the initial bills before the health care kicks in.