The health insurance industry is very unique. When you compare it to other types of insurance, you will find that most insurances are based off of the catastrophe.
You auto insurance does not cover new tires or oil changes. Your home owners insurance does not pay for a new paint job or if your oven breaks down.
Somehow, health insurance, pays for doctor visits ( new tires) and prescription drugs (oil changes). These two benefits are what add most of the cost to a health care plan.
With health insurance you pay for these benefits whether you use them or not.
This is why I love the health savings account type plans. The HSA has a higher deductible and only covers the doctor visits and prescriptions after you meet that deductible. It protects you from the catastrophic loss and kind of puts you in control of your health care dollars. They often times cost half as much as a co-pay plan would cost.
Then, if you choose too you can set up the “saving accounts” portion of the plan in which you can fund it like an IRA, in which money you put it tax deferred and goes out tax free if you use it for medical expenses.
I carry a $5000 deductible then 100% plan so I am on the hook for the first $5000 in any year. I have my “savings account” funded to $5000, so if I do have severe medical loss, I have it covered. Unlike a Flex Spending Account (FSA) that many people have through their job, the money you fund rolls from year to year, so I would not have to fund my “savings account” unless I use a portion of it over the year.
For more information about HSA plans please give me a call. I have done several speaking engagements on this topic.
Eric Wilson is the President of I Sell Health, Inc. A Chicago area insurance agency. He can be reached toll free at 888-448-5370.
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