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The High Deductible Health Plan - What Is It And How Does It Benefit Me?

Aug 17, 2007
Benefits experts are stating that conventional coverage, such as health maintenance organizations (HMOs) and preferred provider organizations (PPOs), are still the main types of healthcare plans. But more health insurance companies and Texas employers will begin to offer High-Deductible Health Plans (HDHP), with a Health Savings Account (HSA) attached, during upcoming open-enrollment periods. The HSA is a tax-favored savings account that's combined with a qualifying HDHP. This allows you to deposit tax-deductible funds into an account that you can use to cover medical costs, as well as enabling you to take control of your own health care decisions.

There are a variety of HDHPs available through various insurance companies. The plans are all similar in that they have deductibles between $1,100 and $5,500 for individuals, and between $2,200 and $11,000 for families. An HDHP with an HSA provides major medical coverage and a tax-free way to help you build savings for future medical expenses. It also gives you greater flexibility and discretion over how you use your health care benefits.

The HDHP also features higher annual deductibles - a minimum of $1,100 for individual coverage and $2,200 for family coverage - than other traditional health plans. The maximum amount out-of-pocket limit for HDHPs, in 2007, is $5,500 for individuals and $11,000 for family enrollment. Depending on the HDHP you purchase, you may have the choice of using in-network and out-of-network providers. Using in-network providers will save you money. With the exception of preventive care, you must meet the annual deductible before the plan pays benefits. Preventive care services may be paid as first dollar coverage or after a small deductible, or co-payment. A maximum dollar amount - up to $300, for instance - may apply.

When you enroll in an HDHP at work, it may be coupled with an HSA or a Health Reimbursement Arrangement (HRA), the latter of which is funded solely by the employer. As with an HSA, your HRA balance will roll over from year to year, but, unlike an HSA, employees don't own the fund. So if you leave the company, you can't take your HRA funds with you or roll them over into new accounts.

HSA plans have not been as widely accepted as was expected when they began to be introduced three years ago. But this year, it is expected that more big companies in Texas will offer them as a health insurance option, and many smaller, cash-strapped businesses will replace their current plans making it the only health-care choice.

With the wide variety of HDHPs and HSAs available today, and the growing administrative and financial burdens of the group health insurance marketplace, Texans need to make sure they have the right plan for themselves.
About the Author
Melih ("may-lee") Oztalay, CEO SmartFinds Internet Marketing
Web: www.precedent.com
EMail: melih@hsfideas.com
Precedent - Health Insurance For The Rest Of Us
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