Here’s what you should consider when choosing between a low- and high-deductible health plan. Your HSA is a personal tax-free health savings account that can be used to pay for eligible medical expenses. Health insurance comes in two primary forms. The downside of an HSA is you must have money in the account to grow it. It is hard to benefit from an HSA if you have a low amount in the account, are constantly withdrawing money from it, or make poor investments. If it is an EPO plan, get the HSA plan as you'll likely be paying full price for a lot of medical care anyway. We began to work the numbers together. Using the the numbers from my friend’s plan and assuming the cost of my friend’s health care services comes out to $2,000 a year, you see if the employee does not contribute any extra money to the HSA, the total after-tax cost to the employee is about the same between the low deductible plan and the high deductible plan ($3,008 vs $3,244). A Health Savings Account (HSA) is like a personal savings account, but it can only be used for qualified healthcare expenses. To be eligible, you must be enrolled in a High-Deductible … The key difference is that an HSA-based plan has two parts: Insurance PLUS a health savings account. Now let’s talk about HSA based plans. A higher deductible means lower premiums and that could mean huge savings for you and your employer. Low-deductible health plan basics. Health Savings Accounts (HSAs) were created by the Medicare bill signed by President Bush on December 8, 2003. HSAs allow individuals/employers to set aside money on a pre-tax or tax-deductible basis and then withdraw the money tax-free to pay qualifying medical expenses. Setting up an HSA Assuming both plans have the same network etc, and the low deductible plan is a real PPO (not some EPO plan with a limited network,) get the low deductible plan. The trade-off is that you'll pay more for your monthly premium when you have low-deductible coverage. She asked me about the high-deductible health insurance policy and the HSA in my book. That means your 2020 healthcare deductible is, at a minimum, $1,400 for you individually or $2,800 for your family. Generally, plans with a higher deductible will have lower premiums because you spend more of your own money on care and the insurance company pays less. With an HSA based plan, you often pay a lower premium in return for having a higher deductible. HSAs, also known as health savings accounts, have risen in popularity over the past few years because along with High Deductible Health Plans (HDHPs) they can vastly reduce the monthly premium you and/or your employer pay. You have an HSA because you're enrolled in a high deductible health plan. With a high-deductible plan, she would definitely be paying out-of-pocket for insulin and other supplies every month, to the tune of over eighty dollars. HSA Basics. Key terms to understand First, let’s brush up on some basic health insurance terms. Find out about the benefits and drawbacks of a low and high deductible health plan in time for open enrollment. You may also have multiple deductibles, such as one just for prescription drugs. The investments you can make through an HSA are typically more limited than those you can make with a 401(k). Deductibles might range anywhere from about $0 to $8,550 for an individual, or $0 to $17,100 for a family. **A High Deductible Health Plan (HDHP) is a health plan with lower premiums/plan contributions and higher deductibles than a traditional health plan. Low-deductible health insurance plans carry a lower deductible, meaning that when you get sick, you pay less money upfront before your plan starts paying. 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