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