How To Increase Health Care Benefits And Keep Premiums Low
The cost of health insurance has skyrocketed and premiums are only getting higher. It is becoming more difficult for the average working guy to provide his family with an affordable health insurance plan that covers all the basis. If you want to incorporate complimentary and alternative health care you are generally on your own.
This is the 2nd part of an earlier article that will provide you with some real solutions to be able to do just that.
Steps to take:
1. Sign up for a high deductible health insurance plan.
2. Create a 2nd health account.
3. Create a health savings account.
4. Sign up for health a health discount cared covering: dental, vision, vitamins and herbs and alternative medicine practice.
5. Add a medical expense rider to your auto insurance premium.
Let’s start with the health insurance policy.
What is health insurance?
The purpose of insurance is to cover the costs for an individual when those costs are so great that the individual would suffer great hardship if he had to pay the costs himself
Let’s use this example. When your house burns down, the cost of replacing the entire house is probably out of reach for most individuals.
So we buy house homeowners insurance and pay a small premium each month for the promise that if our house burns down money will be there to replace it quickly.
We don’t, however, expect the insurance to pay every bit of maintenance on our home like cleaning the windows or installing a new phone line or repairing a small hole in the wall. However we seem to take a totally different approach with health insurance. We expect the health insurance to be there for the big stuff, but we also expect that it should cover all medical services no matter how small. When we visit the doctor with the sniffles, we want the insurance to pay.
Even with a small item such as a prescription of $20.
We need to change our current mind set with regard to health insurance. What we have now is unworkable and has in essence created a monster.
Our current health care system has;
* Sky rocketing costs
* Idiotic bureaucracy
* Unhappy doctors and patients
* Many students are steering away from becoming primary care physicians and going into specialties.
You need to rethink your attitude toward health insurance and get out of the madness. Here is a solution.
Step #1 Purchase a high deductible qualified HSA plan.
Insurance companies make these premiums lower because you are saving them overhead. Buy a high deductible qualified HSA plan using a $2500.00 family deductible with a 100% co insurance. The $2500.00 deductible is an optimal deductible because even if you have had a bad year and had to pay the entire deductible, you will still be ahead because you’ve been paying lower premiums.
Lets compare some hard numbers based on an average premium for a young family of four
1. Low deductible plan @ $250.00
2. 80-20% co insurance to $10,000.00/100%
3. Physician co pay- $25.00
4. Prescription drug card
5. Monthly premium- $800.00
High Deductible -HSA Qualified Plan
1. Deductible of $2500/100% co insurance
2. Physician co pay not included
3. Prescription drug card, not included
4. Monthly premium-$330 per month
5. The monthly difference between the two premiums is $470.00.
6. This is a savings of $5640.00.
Year one scenario, no major illnesses
$900.00 spent- $750.00 for doctor, $150.00 RX
Low deductible plan:
1. $0 deductible
2. Physician co pay x3- $75.00
3. Prescription drug costs @30%- $45.00
4. Premium paid- $9600.00
5. Total paid-$9720.00
High Deductible plan
1. $750.00 paid toward deductible
2. $150.00 prescription drug costs paid toward deductible
3. Premium paid $3960.00
4. Total paid-$4860.00
Overall your savings is $4860.00
Year two scenario
$67,000 spent for hospitalization, %5000.00 in prescription drugs
Low deductible plan
1. $250.00 deductible
2. Policy co insurance $2000.00
3. Premium paid -$9600.00
4. Total paid- $11,850.00
High deductible plan
1. $2500.00 deductible
2. Premium paid- $3960.00
3. Total paid- $6460.00
Overall your savings is $5390.00
Step #2 take the $5640.00 you save in premiums each year and put this money into a savings plan every year and it will grow to $113,557.00 in fifteen years (4% return)
What would you do with $113,557.00? If you like using complimentary and alternative medicine you can incorporate this into your family’s overall health care plan.
You can use this money and pay for expenses not covered on your traditional health care plan. Expenses such as;
1. Traditional Chinese medicine
2. Homeopathic
3. Naturopathic
4. yoga classes
5. fitness trainer
Step #3 Open up a Health Savings Account and pay the deductible from this account towards the medical expenses covered in your policy. You can also use the HSA account to pay other qualified medical expenses not covered on your health insurance plan. Eligible medical expenses that may not be covered on your health insurance plan could include expenses such as;
1. Insurance premiums
2. Acupuncture
3. Chiropractic
4. Dental treatment
5. Eye care, eye glasses, contact lenses,
6. Weight loss
For a complete list of eligible expenses, http://www.irs.gov/pub/irs-pdf/p502.pdf
Take control of your family’s health care plan. Essentially be your own insurance company for the small expenses that fall under your deductible. There is “no use it or lose it” with an HSA account. Whatever money you don’t spend will roll over to the next year and continue to grow at tax free interest. You can deposit more money each year into the account or just sit on the money you have without making additional deposits.
The HSA is only available if you have the high deductible qualified plan. For an HSA established by an employee of the company, the employee, the company or both can contribute to the HSA. Employer paid contributions to an HSA are treated as employer-provided coverage for medical expenses.
Step #4 You may want to look at purchasing a dental and vision discount card. This will provide discounts and further savings for dental and eye care expenses.
Step #5 Purchase the health insurance rider on your automobile insurance policy. This way if yo or a family member should need health coverage from a car accident, you will not have to pay the $2500 deductible on your health insurance. The auto policy will pay it for you. Enjoy having good health and the best that health care can provide.
To get more information on this article and others visit: Your Insurance Matters