| We all know that health insurance costs are going up | | | | However, the premium is $200 per month less! Take |
| every year. In 2006, the cost of health insurance | | | | part of this $200 per month savings and purchase an |
| premiums rose 7.7 percent. Actually, this was the | | | | accident plan. Typically this will cost $30 per month to |
| slowest growth since 1999, but that was still more than | | | | cover the entire family. If any member of the family is |
| twice the pace of inflation or workers' earnings. | | | | involved in an accident, they will be covered up to |
| Interestingly, the lowest premium increases were for | | | | $5,000 per accident. Let's say one of the children is |
| the high-deductible catastrophic health plans. The HSA | | | | playing soccer and breaks his/her leg. That can cost |
| type plans consist of a catastrophic coverage plan | | | | close to $5,000. The accident plan pays $4,900 |
| coupled with a Health Savings Account. The Health | | | | because there is a $100 deductible on that plan. The |
| Savings Account, (HSA) is a special savings account | | | | major medical health plan has the $4,500 |
| that you can open at your local bank. Money deposited | | | | out-of-pocket expense, but it is more than paid for by |
| into this account is exempt from taxation. That is, you | | | | the accident plan. Your total risk is less than zero. |
| get a tax deduction for depositing money into this | | | | Oh, you say, but what if it isn't an accident? That is |
| account. The HSA account is very similar to the | | | | why you buy the supplemental hospital plan. That plan |
| traditional IRA. The White House has been pushing | | | | would cost $71.87 per month and it would cover the |
| these plans as a way to slow the cost increases by | | | | entire family too. Another example is necessary here: |
| giving the consumers more say over their medical | | | | One of the family members needs a surgical |
| treatments. So, your first task is to learn about HSA | | | | procedure to correct GERD. (Gastroesophageal |
| type plans. They will save you money. | | | | Reflux Disease.) This may be a three day hospital |
| It is good to save money, but I promised to show you | | | | stay. What would this supplemental hospital plan pay? |
| how to decrease your risk and decrease your | | | | First, it would pay $600 for the surgery, plus $150 for |
| premiums. | | | | the anesthesia, or $750. Add the benefit paid for three |
| Let's look at an example: | | | | days in the hospital or $2,000 and you have a total of |
| Assume a family with a 38 year old male and a 36 | | | | $2,750. This is not enough to pay the $4,500 out of |
| year old female with two children. All are in standard | | | | pocket, but it would if the hospital stay were six days. |
| health. | | | | A six day stay would pay $2,000 for the surgery, and |
| A $500 deductible 80/20 major medical plan plan is | | | | $500 for the anesthesia, or $2,500. The six day |
| $815 per month. The maximum out-of-pocket expense | | | | confinement would pay $5,000. This totals $7,500 |
| should one of them had to be hospitalized for five | | | | which is more than enough to pay the $4,500 |
| days is $2,500 -- that is, the total financial risk is $2,500. | | | | out-of-pocket expenses. You actually end up ahead |
| (By the way, five days is the average length of a | | | | financially. |
| hospital stay.) | | | | Let's total up our costs. We saved $200, but spent |
| Consider an alternate choice: | | | | $30 plus $71.87 or $101.87. We still are saving $98.13 |
| Let's look at a $2,500 deductible plan with a monthly | | | | per month on our premiums and we have decreased |
| cost of $615. With the same assumptions as above, | | | | our out-of-pocket risk considerably. |
| the total risk for the five day hospital stay is $4,500. | | | | This works. This is an actual example. |