Health Savings Account

By | February 11, 2008

A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit. Funds may be used to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses are treated very similarly to those in an IRA account in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier. These accounts are a component of consumer driven health care. [Source: Wikipedia]

Since I am self-employed, I am responsible to get my own insurance. I have signed up with the HIP Select PPO plan. The monthly premium is $365.58 a month. The plan has a $1,000 deductible for in-network and $2,000 for out-of-network. The copays are $20 for a primary care physician and $30 for a specialist. The copay only comes into play when the deductible has been met. That means, I have pay the full price to see a specialist, usually around $100 a visit, until I have spent $1,000 out of my pocket for in-network doctors in a calendar year, before I get to pay copay of $30 to see a specialist.

HIP Select PPO Overview
Deductible: In-Net $1,000
Deductible: Out-Net $2,000
Copays: PCP $20, SPEC $30, ER $50, 20/30 RX, $50 NF
$365.58 / month

I did some research on HSA plans because I wanted to put my deductible of $1000 in a tax-deductible medical savings account. I found many websites talking about HSA plans, but very few that actually offers one. I finally stumbled across a few websites, such as HSA Insider that helps you to search for HSA Plans in your area. The search produce very few results. One of HSA providers is Sovereign Bank. The plan looks good to me so I called them.

I spoke to a representative in Sovereign Bank, who was very helpful, and she help answered my questions about HSA plans. It turns out that my medical insurance does not qualify for a HSA plan, because it is not a High Deductible Health Plan (HDHP). She specified that HMO and PPO plans are not eligible for HSA plans, and only HDHP plans are eligible for HSA plans.

I was disappointed to hear that I was not eligible for a HSA plan. The medical insurance monthly premiums are already costly and I still have to pay high prices for doctor’s visits. I think we really need an answer to health insurance in this country.

4 thoughts on “Health Savings Account

  1. Aaron D.

    I am glad to hear people are looking into this subject. I just had a full course on these issues. Universal Healthcare is not the way to go if thats what you are pointing towards.

    HSA’s are designed for high deductible healthcare plans. They are a good alternative to the HMO’s and PPO’s because they push the price to the consumer. The theory of it goes: the consumer will go out and “shop around” doctor’s offices for lower prices. This leads to less prices as the free market works itself out, as doctors find themselves with less patients. This has never been done before, and the market is heading directly this way. This third party payment system is leading to people going to more maybe unnecessary visits, and not caring about the cost to the insurer. The HMO system for making doctors insurers leads to doctors not treating patients well (So in other words, don’t get sick) In the future I believe I will choose this option, if it is an option when I go out into the corporate world, because it’s like I am responsible for my own fate, not some insurance company, or doctor.

    One of the reasons why healthcare costs so much is because patients do not care about the price. the only price they pay is the “copay.” I would opt funds into an HSA with a nice tax free environment.

    The point is, not everything is black and white what the democrats say. One size fits all is not going to work for everyone. I am not saying you should stop listening to them, I would suggest that they research on some of this before destroying the whole system apart, and especially obama, needs to take a course in college in economics and pay attention, or else this country is headed for trouble.

    I am a risk management and insurance student and had to take a course on this subject. Good luck!

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