Let's talk about Health Savings Accounts (HSA)

What is an HSA?

• An HSA (Health Savings Account) is a government regulated savings account where you can contribute money, tax-free, to pay for your medical expenditures, such as your deductible, prescriptions drugs, dental, vision and so on...  Any unused funds in the account for the year, roll over to the next year.  Your money in the account will earn interest that is tax-deferred.

• In order to have an HSA you must apply for a qualifying High Deductible Health Plan (HDHP)

What is a HDHP?

• An HDHP is a health insurance plan with a deductible greater than $1,200 that does not include any pre-paid benefits such as an office visit copayment or prescription drug card.

• In Illinois, there are only two carriers that offer deductibles below $1,000.  All other carriers begin at $1,000 or $1,500 for non HSA plans.

What will happen when there are no copayments for office visits or prescription drugs?

• First, when you become a member of an insurance carrier, you are given access to their network of providers, known as a PPO (Preferred Provider Organization).  By seeking services at providers within the network, you fully utilize the plans benefits.  This allows you to receive a negotiated rate on the services provided.
• An example would be a doctor charging $100 to the public for an office visit in relation to an accident or illness.  If the doctor is in your carriers network, you would not be subject to the $100, but a negotiated rate, which could be anywhere from 20-50% lower. 
• The final negotiated rate is what the insured would be responsible to pay the provider, which would be applied towards the plans deductible, whereas an office visit copay would not apply to the plan.  An insured may be responsible for around $65-$70.

• Second, 90% of insurance carriers cover your annual physcial for males and females along with a females annual OB/GYN visit at 100% or under a copay, even HSA plans.

• If a non-HSA plan has an office visit copay, the copay will only cover the cost of the initial visit, the negotiated rate.  Once lab work, diagnostic tests or X-rays are ordered...than they all become a deductible expense and do not fall under the copay.
• Now, keep in mind that doctors all charge different rates, especially a specialist which could run around $300/visit before the negotiated rate.
• You can always call your doctors billing department and ask how much they charge for visits.

• If you currently are in treatment and take prescription medication, carriers may offer a genric presciption drugs card on non-HSA plans than require you to meet a separate $500 or $1,000 deductible for Brand or Preffered Brand name drugs, before a copay would then apply.
• HSA plans will apply the cost of your prescription to your plans deductible, whereas if there was a copay for a Brand or Preferred Brand name drug, it would not be applied to your deductible
• If you were on a Brand Name drug and had a copay of $35-$75/month, the copay would not go towards your deductible.  This is an average of $500 in annual copays that would be an out-of-pocket expense.  If you had an HSA plan, than you would have lowered your deductible exposure by $500, meaning you would owe less on a larger claim, if there was one.