A health savings account, or HSA, combines a high deductible health plan with a tax-favored savings account. Assuming there is transparency, as the Colorado Health Insurance Insider recently tested for, HSAs would encourage people to shop for health care just as they would for a new television or car. The HSA concept allows the free market to drive the cost of health care down, and the quality of health care up. In a recent poll, 79 percent of respondents felt
that allowing people to shop around for their own medical care would be an effective way to control costs.
However, in 2006, high deductible health plans needed to have a minimum deductible of $1,050 for an individual plan or $2,100 for a family plan. When this factor was considered by the same respondents, 66 percent were opposed due to
the risk of higher out-of-pocket expenses.
For the HSA and consumer-directed health care industries, go back to square one to fend off the perception that higher deductibles mean the consumer pays more out-of-pocket.
Perceived Risk of High Deductible Health Plans
We all know how difficult it is to look past the deductible amount of our insurance. After all, the deductible is what you could end up paying out of your pocket. But wait, aren?t we forgetting something? Premiums, co-insurance and co-payments (co-pays) all add to the final medical tally at the end of the year.
So before balking at a high deductible health plan because of the risk of higher out-of-pocket expenses, do the math. Add the total cost of the high deductible health plan and the total cost of the health plan with the deductible of your choice and compare. Be sure to include the annual premium amount, the deductible amount, and any co-insurance or co-payments that you may be required to pay.
| Traditional Plan | High Deductible Plan | |
| Annual Premium: | ||
| Annual Deductible | ||
| Co-insurance amount: | ||
| Estimated co-payments: | ||
| Total: |
This calculation does not include the tax benefits and savings potential offered by an HSA.
By doing the math, we can see beyond the higher deductible amount and get to the total cost of the plan. And that is what we really want to know: ?What could this cost me when it is all said and done??
The real risk associated with high deductible health insurance plans in Colorado is not higher out-of-pocket expenses. If we are honest, the real risk is trusting in something new.
Thanks to HSA Bank for the table.
