Reading an article under MoneySmart in the USA Weekend I am reminded how many Americans are in a place to make a beautiful decision to help them and their family’s financial future. That decision is to choose to use a Health Savings Account to improve their financial standing. As you know the open enrollment period is upon us and some of us will find a new option on the health insurance menu this year. "More than a quarter of the nation's employers will offer consumer-driven health care plans (CDHC), says Hewitt Associates, a benefits consultant."How Health Saving Accounts work: The insurance component is based on a high upfront deductible (as much as 2,500 for a single, or 4,000 or more for a family) in exchange for lower monthly premiums. You will receive a debit card or credit card from your insurance company to pay for your health costs, which comes out of the premium savings that is deposited into a Health Saving Account an IRS approved Individual Retirement Account (IRA). Insurance may pay up to 80-90% of your health cost after the deductible, and employers may deposit a fixed amount for each employee into a tax-advantaged Health Savings Account (HSA) to help pay for out of pocket costs. You can also contribute your own pretax dollars to the HSA.
Tips to follow to help make sure this new option is right for you and your family. Ask if your company has an online calculator to help compare and analyze all the choices. If the company does not have a calculator, then ask to see if the insurance company has one.
Comparing High Deductible vs. Low Premium:
Healthy, single workers, for example, may find the savings on premiums combined with the tax benefits of the Health Savings Account makes that a better deal. Anyone with a chronic illness will find their usually better off staying with the traditional High Premium-Low Deductible health insurance.
