The HSA allows you to Take Control of Your Health Care Plan

Nov. 19, 2009 - PRLog -- The H S A grew from the concept of consumer driven health insurance. To define what a consumer driven health product is, we need to look back years ago, before health insurance.  A patient visited a doctor; he or she then paid the doctor what they could afford and what the doctor would accept in payment.  It could be something as simple as a chicken.

Today our system design is completely different.  CMS is the acronym for Centers for Medicare and Medicaid Services. CMS has standardized everything within the medical environment.  There are now CPT codes (CPT which is the acronym for Current Procedural Terminology) has to be assigned to each procedure a physician performs.  Each code is attached to an ICD 9 code which identifies the type of sickness or injury.

The insurance industry and medical providers now use these codes. A mistake or mismatch of a code which is improperly reported to an insurance company can slow or cause a claim to be denied.  Physicians and hospitals are in the business to be caretakers, but they are forced to spend much of their time and resources making sure they are properly compensated.  The payer is now the government or the insurance companies.

The system has become so complex that that the physician is compelled to hire personnel who understand procedures and mechanisms mandated before they are properly compensated.

This system has separated any monetary interaction between a patient, physician or the care facility.  Another disadvantage to the system is that the insurance company is paying the bill.  The consumer becomes apathetic about cost, because they are not directly affected.  With their employer paying their health insurance premiums, most employees have no concept of the actual cost.

The escalating insurance costs have caused many businesses to ask their employees to pay a percentage of the premiums.   Most employees are willing to pay a percentage to keep their plans, and participating in the cost does get their attention. I have always found it interesting; when something affects our monetary status our attention is acute.

Other options to reduce costs by employers are to reduce the benefits, increasing the deductible, limited number of annual office visits, and deductibles for drug cards.

Reduction of benefits is not popular with employees because they want a low deductible, unlimited physician visit co-pays and prescription drug cards with low copayments.  The reason for the popularity of these plans is the burden of expenditure is passed to the employer and the insurance company.

The current system allows for little or no responsibility for the consumer to fully appreciate what the employer pays for insurance and what the insurance pays the physician.

When we, as a consumer purchase a product or service, with our hard earned dollars, a prudent person considers cost and value.  We do not want to pay more than we should. This concept is not new but it is consumer driven health care.

We have seen the HSA accounts become more popular with the individual buyer than employees of company’s.  The primary reason; an individual is responsible for their health insurance payment as it comes from their personal earnings.

Health policies can be divided into three facets of cost; Physician Visits, Prescription Drugs, and Hospital In Patient/Out Patient Care.

Hospital In Patient/Out Patient medical plan cost is determined by the deductible the client chooses. Realize the higher the deductible the lower the premium; the lower the deductible the higher the premium.  Individuals who are paying for their policy usually choose a deductible of $5,000 to 10,000 dollars.

Physician visits and Prescription Drug benefits are cost constant and are not reduced if the Deductible is increased.  Simply put the savings are realized only in the deductible.

An actual example: A young family of four is considering an individual health plan.

$5,000.00 deductible Hospital In & Outpatient            $244.39
Drug card with co-payment                                        $  87.80
Physician visit co-payment                                         $137.94.  
                                                                                  ____________
                                                                                   $450.00

Monthly cost: $225.74 for drugs or office visits.  Annually $2,708.88

Using this Information one can consider if the H S A Consumer driven health care is beneficial to their needs.  Eligibility for an H S A is contingent on the purchase of a high deductible health plan (HDHP) complaint with government guidelines.  A minimum deductible of $1,150 for individual and $2,300 for family.  A maximum of $2,300 individual and $11,600 for family.  The plan can not have co-payment for drugs or physician office visits. (These are applied to the Deductible)  

In the above example the family would have to look back over the last few years and consider, were their Physician visits and Drug expenses greater than $2,700.00 per year.  

Then answer the question: What is best?  To put $2,700.00 per year in your tax favored savings account or to give it to an insurance company for the privilege of a doctor visit and drugs.

The savings account empowers the consumer.  The consumer goes for a physician office visit; they will ask the doctor how much he’s going to charge because they’re paying cash out of their savings account.  This is a win for the consumer and the physician, the consumer receives a discount and the Physician immediately receives his fee and accrues no billing costs. (H S A accounts issue account holders, debit cards or checks).  

The consumer also becomes cognizant to the cost of drugs. It is best to question the physician if there is a generic equal to a brand name drug. We have seen generic drugs for $10 that do the same as name brands that cost $150.

Another advantage of having a HEALTH SAVINGS ACCOUNT is tax favored (not having to pay FICA to our income tax) which, saves the consumer as much as 40% in taxes. (The amount is contingent on your tax bracket).

The H S A account is available for any family member (they do not have to be on the health plan).  Authorized medical expenses include; vision, dental, over the counter drugs, and services that are medically necessary.  

There is no limit to the amount of money that can accumulate in the H S A account.  Funds can pay for cobra premiums, long-term care, and medical expenses after age 65.  

In summary, a healthy informed individual should carefully weigh the advantages of the HEALTH SAVINGS ACCOUNT and the prudence of the consumer driven product concept.  

The HEALTH SAVINGS ACCOUNT is an option that should be scrutinized by all.  Consider what is best for you and your family, knowledge empowers you!  Ask your employer if the HEALTH SAVINGS ACCOUNT option is available through your work place or ask you local agent for information on HEALTH SAVINGS ACCOUNTS.  

Respectfully,
Gary McCarron
http://www.thegroupdivision.com/
888-248-3537