Make the Most of Your Health Savings Account (HSA)

If you are like me, you don’t qualify for the Advanced Premium Tax Credit, and with a family of four, health insurance is a necessary evil, yet ohhhh so expensive.  The self-employed are among the hardest hit when it comes to the cost of health care, post “Affordable” Care Act (ACA).  We represent a subset of the insured population, who must absorb the full cost of our health insurance, because we don’t have an employer that contributes to the cost of our monthly premium.

I find that very few people grasp the incredible value of the benefits that their employers provide. The going rate for family Bronze level coverage, at least in Colorado where I live, runs in the neighborhood of $1100 to $1500 per month for a family of four, varying by age and geographic location.  It’s even worse in rural towns.  To add insult to injury, many insurers are now refusing to participate in the individual and family health insurance markets, leaving us with only a few insurance carriers and networks of participating health care providers to choose from.  Some counties are limited only to the Anthem Pathway HMO!

With the lack of choice, most self-employed individuals and families have opted to go with the least expensive, highest deductible options.  These plans are typically Health Savings Account (HSA) compatible, also called HDHPs.  HSAs make good sense to use as a mechanism for the self-employed to save money on taxes, since contributions are a tax deductible expense.

Unfortunately, as a health insurance agent, I’ve found that many people really don’t understand how to properly use their high deductible, HSA compatible health insurance, to make the most of their benefits.  So I thought a brief essay on this subject is fitting.

First, it’s important to understand that your HSA compatible insurance IS insurance, even though it pays for nothing other than preventive care before the deductible is met.  You’d be surprised how often I come across new clients who were never educated that, in order to receive discounted services AND work towards meeting the plan deductible, the insurance card must be presented at the time of service, and a claim must be filed.  If you use a healthcare provider that is networked with your plan, don’t pay the full amount for the visit, until after the doctor’s office files the claim and sends you a bill.  If the doctor’s office insists on payment upfront, just make sure the payment is less than or equal to the contracted rate for the service.  Most doctor’s offices don’t know their contracted rates, so I recommend paying no more than $50 upfront for a PCP (Primary Care Provider) or $100 upfront for a specialist.  Once the claim is filed and discounted, the doctor’s office will bill you for the rest.

Did you know that there is no time limit for reimbursing yourself from your HSA account?  This means that you can pay for medical, dental or vision care out of pocket, and reimburse yourself from your existing HSA account later….even many years later.  The advantage in saving receipts and reimbursing yourself later is allowing your money time to earn interest while it’s in your HSA account.  HSAs have the potential of earning more interest than other savings accounts, as some banks, such as HSA Bank and UMB Bank, provide the option of investing in mutual funds within the Health Savings Account.

As the member of a high deductible health plan, it’s important to choose healthcare services wisely while in the deductible phase of your coverage.  New Choice Health is an excellent website, where one can shop and compare the cost of medical procedures, prior to receiving health care.  They will even provide free quotes, based on which insurance you have, so you can get the most for your money.

Wherever possible, choose generic prescriptions.  A good website you can use to research generic alternatives is goodrx.com.

Most importantly, don’t avoid receiving medical care, just because you have a high deductible health plan.  If you can’t find affordable, high quality care within your plan, consider direct primary care.  Direct Primary Care providers offer 24×7 primary healthcare, often for a very low monthly fee.  Some people purchase direct primary care for their routine care, and reserve their high deductible health insurance only for catastrophes.  It may seem like a lot to pay additional money for direct primary care, when you already have expensive health  insurance, but for some, the benefit clearly outweighs the cost.  Currently, the IRS does not allow HSA dollars to be used for direct primary care, however, a new law is expected to be passed early in 2017 to change that rule.

Last but not least, if the thought of having high deductible health insurance frightens you, consider supplementing your health insurance with accident or critical illness coverage.  These supplemental plans can relieve you of your health plan deductible in the event of an accident or illness.

 

 

A Doctor’s Opinion

The following is a quote I saved from a doctor I follow on social media:

“We should not return to the situation that we had before Obamacare. That was terrible, although not as terrible as after Obamacare. It was terrible because of government regulation. Some people are asking what should be put in to replace Obamacare. Repeal the act, and do not replace it with anything. Rather, keep repealing layers of government intervention that made health care so expensive before Obamacare was passed. Prior to Obamacare, health care was, along with education, the most heavily regulated sector of our economy. Prior to government control becoming so entrenched, in 1960, an uncomplicated appendectomy could be had for $150. That adjusts for inflation to $1,223 in 2016. Delivery of a baby, with a 4 day hospital stay, was $50 in 1950, converting for inflation to $501 in 2016. Average spending per capita on health care was remaining under $500 in the first half of the twentieth century, again adjusting to today’s dollars. Technological advancements were racing forward. Estimated longevity increased 44% in the first half of the twentieth century, due largely to development of new medications, including antibiotics, and development of new surgical techniques, xrays, EKGs, etc., all while health care spending only increased 1.9% per year above general inflation. In the second half of the twentieth century, with government involvement, longevity increased by only 13%, while spending jumped to over $8,000 per person. Service declined dramatically. House calls, and thorough and prompt service, suffered. This was before Obamacare, but with heavy government regulation. Tax incentives toward third party coverage were the main reason. The creation of Medicare and Medicaid, with their stifling regulations that drive up the cost of providing health care, also caused much of the damage. The HMO Act of 1973, CLIA, state insurance mandates, Stark laws, DEA, the FDA, ERISA, etc. all piled on more layers of government interference. We have not had anything resembling a free market in health care in many decades. Let’s try a wild, radical new approach – freedom. Get the government out of it. Then health care could be affordable to common people just like advanced electronics are now. Have you noticed how technology keeps advancing, while prices continue dropping, in electronics? Go into the home of a so-called “poor” American, and look at the electronics they have. There is a free market in electronics, but not in health care. Get the government out of health care, and MRI scans will be just as affordable as wide-screen TVs. Supply and demand affect health care just as they affect every other area of economic activity. Government interference has been inhibiting supply and driving demand for decades, leading to our high costs…….. I used to favor a nationalized health care system, until I went to medical school and learned what damage our semi-socialized system was doing to the country and even to the people it was purported to be helping. Now I run a family practice, operating as closely to free market principles as possible in America today. Fees are so affordable that even waitresses sometimes leave me tips. You will be surprised what free markets can do, not just in family practice, but even in more complicated care like surgery.

So what should replace Obamacare? Nothing. If I have a patient with skin cancer, I cut it out, and do not replace it with anything. We need to excise the malignancy, government regulation, that is threatening the life of our health care system. That cancer has been growing for decades. Do not replace it with anything, just keep excising until it is gone.”

Dr. James Brook

Dr. James Brook is the author of the book, The High Price of Socialized Medicine.