1. A qualified high deductible health insurance plan
2. A tax qualified Health Savings Account at a bank
When you use both components correctly, your real cost of health care is dramatically reduced with lower premiums, network discounts, and tax deductions.
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How do I use my high deductible health insurance plan?
First, it is very important that you make every effort to stay “in-network” when visiting a doctor, hospital, facility, or pharmacist. When you do, you will receive tremendous discounts with the pre-negotiated network rates, and those discounted prices on all medical necessary services, will go towards your chosen in-network deductible. Keep all receipts as proof of your out of pocket expenses, and submit to the insurance company if necessary. All deductibles reset to zero on January 1st of each year. You are responsible for payment of services until you reach your deductible. When you receive services outside of network, you will NOT receive the discounts, and the higher cost goes towards a much higher out of network deductible. Here are some examples of how to correctly use your health insurance:
Sick Doctor Visit: Visit any in-network doctor, show them your medical card, and ask that they send the claim through for all services/tests and bill you the discounted rates. If you are a new patient, the doctor may ask for payment up front, and you will be reimbursed after claim is submitted. Be sure your doctor knows you have a high deductible plan when being seen, the tests ordered or Rx prescribed will change dramatically. Most doctors are used to having the employer plan pay for everything or they will assume you have “co-pays” on the plan.
Preventative Well Visit: On most plans, child well visits will be free. Adult well visit coverage is limited, unless you have a preventative care package added to the plan. Be sure to check your policy for preventative services and the limitations.
Prescriptions / Rx: Since you are responsible for all costs up to the deductible, be sure to ask if there is a cheap generic alternative. If not, inquire about a larger dosage for the same price, and split your pills to cut your Rx costs down by 50%. Be sure to go to a “in-network” pharmacy to receive network discounts. Your medical card is also to be used for Rx products at the pharmacy. Turn in receipts to your insurance company. Check the back of your card for Rx info.
Hospital / Surgical / Outpatient Services: Be sure to stay in-network when visiting hospitals and outpatient facilities. Check your health insurance website for current information. You will receive large in-network discounts, and it will go towards your in-network deductible. All hospitals in the U.S. are considered in network for “emergencies”.
Call the phone number listed on the back of your insurance card, or call your agent for more information.
How do I use my Health Savings Account?
Because you have purchased a qualified high deductible health insurance plan, you are now allowed to open a Health Savings Account (H.S.A.) at any certified H.S.A. financial institution. You can search for banks at www.hsainsider.com . I’d recommend Delta Trust Bank out of Arkansas at www.delta-trust.com because they have no fees and a competitive money market FDIC interest bearing account. If you want to invest the money behind stocks, bonds or mutual funds; then visit www.hsabank.com for more information.
How much can I contribute?
Contributions for 2010 and 2011 stayed the same at $3,050 for an individual and $6,150 per family. If over age 55, an extra $1,000 can be added as a catch up contributions. All contributions are tax deductible on the front page of your 1040 tax form as an adjustment to your adjusted gross income. All growth or interest in the account will grow tax free. You do NOT have to use the money each year, and any money leftover can be rolled over for future years. New contributions can be made each year to accumulate funds over the long term. Contributions can be made by check when you desire, set up as monthly auto drafts, or employer funded.
When and how can I spend my H.S.A. money?
You can spend your money TAX FREE anytime over the rest of your life for any qualified medical, dental or vision expense; whether or not it is covered by your insurance policy. See publication 502 at www.irs.gov for a complete list of approved tax free expenses including doctor/hospital visits, Rx, long term care, braces, lasik eye surgery, etc. You will receive a debit card or a checkbook with your savings account as the method to pay for your expenses as they occur. Or, you can spend cash out of your pocket, keep the receipt, and reimburse yourself at the end of the year or anytime in the future. Regardless, keep all receipts for insurance company and I.R.S. purposes. With the PPACA changes, starting 1/1/2011, the HSA penalty is now 20% for non-eligible expenses, and you can no longer use your HSA for OTC medications. Other OTC items like band aids are still eligible.
