In order to see the advantages of the high deductible (HD) option, you need to understand the health savings account (HSA) option as well. Understanding both plan features will help you determine the best option for you and your family.
The HD plan has lower premiums but higher deductibles vs. the point of service (POS) option. The HD plan allows you to choose the providers that you want to see without network restrictions. With the exception of wellness and preventive care, which are covered at 100%, you pay the full out-of-pocket expenses until you meet your deductible. Once you meet the plan deductible, the reimbursement for expenses is 85% (vs. 80% with the POS option). Unlike the POS plan, you must submit your expenses to be reimbursed.
One of the biggest advantages of the HD option is the HSA. In addition to other important features, the HSA can help you put aside money to meet the high deductible requirement.
The HSA is only available with a high deductible medical plan and offers you a tax-advantaged way to save for your healthcare costs now and in the future. An HSA account allows you to put aside pre-tax dollars into what can be considered a medical savings account to use to pay deductibles and out-of- pocket healthcare expenses. As long as you use the funds to pay for eligible medical expenses as defined by the IRS, you are never taxed on either the funds or earnings. In addition to the tax-free contributions and earnings, Ogilvy CommonHealth Worldwide supplements your account to help meet those higher deductibles by making an annualized contribution to your account of:
- $500 for Employee Coverage
- $750 for Employee + 1 Coverage
- $1,000 for Employee + Family Coverage
Since it is designed to be a savings account, you are not at risk for losing unspent money at the end of the year. Your dollars roll over from year to year and earn interest tax-free. You may also change the amount you choose to save at any time during the year. Once your balance reaches $2,000, you can invest your money in a manner similar to a 401(k), where you determine how to allocate your funds. Because you own your HSA, you keep it even if you change health plans or jobs.
In 2013, the HSA allows you to put aside a maximum of $3,250 per individual or $6,250 for family. These maximums include employer contributions. There are some restrictions on HSAs, including reimbursement for domestic partner expenses and Medicare recipient eligibility. To see more information, visit Aetna’s website to watch a video on the HSA option.
Healthcare expenses continue to rise. How you prepare for these expenses now can have a big impact on your ability to meet future expenses after retirement, a time when you will probably need to rely on your healthcare the most. The HSA account allows you to save now toward that goal and pay fewer taxes as you do so. But only you can decide what is right for you and your family. Understanding more about your options should help you in making the choice that is best for you. Aetna has a great primer that discusses important things to consider when reevaluating your health benefits. In addition, for more tools and information to help you in your decision, go to Aetna Tools and Information.
*Disclaimer: The information in this article is not intended to be a description of the details of each plan or program. Accordingly, if there is any discrepancy or conflict between this article and the governing plan documents, then the plan documents will govern. In addition, this article is intended for information purposes only and is not meant to offer advice or opinions as to what medical plan benefit is best for you and your individual needs.
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