California health
insurance
Health insurance
articles for California
Health Savings Accounts and California health
Finding the Best HSA Values On The
California Health Insurance Market
HSA plans make sense if you plan on funding the account (detail below)
HSA plans will continue to be offered after Health Reform (detail below)
Preventative is now covered prior to the deductible
Interest and investment is generally tax deferred and you can pay
eligible expenses pre-tax |
We've been fans of the HSA or
Health Savings Account health plans in
California since they we're called MSA's and for
a very good reason. They saved 1000's of our
clients 1000's of dollars. It's that simple.
So what is an HSA health plan and what is their
future in light of the Health Reform
requirements? First, let's break down what the HSA is and how it can be beneficial. We'll also
discuss if it's still the great savings it has
been over the past decade and what's required to
really make it make sense. So let's get started
on the HSA.
What is an HSA plan and what
are the advantages?
 Very simply, the HSA
generally refers to two separate parts. The
first is an underlying high deductible health
insurance plan. Most of the carriers offer
these HSA qualified plans and you'll see the "HSA"
type next to these plans when running your
California health insurance quote for both the
individual/family or Group market. Not any high
deductible plan will do so make sure to look for
the HSA sign. As a side note, almost all the HSA
plans currently use the PPO network of doctors
aside from Kaiser. With HSA plans, all benefits
aside from preventative benefits are subject to
the main deductible. This is the biggest
difference in core health plan benefits between
the HSA qualified plans and other PPO high
deductible plans and usually, the main effect is
for office visits (no copays or co-insurance)
and prescription (no copays). Office visits
(except for preventative) and prescriptions will
be subject to the main deductible. Otherwise,
it's a high deductible (should be lower cost)
PPO health plan. So far, pretty straight
forward.
The tax-favored HSA account
is really the key
The second piece is where
HSA's differ and really, it's where the
potential cost savings can be found now that the
health plan rates are now pretty comparable with
other high deductible PPO plans. If you are on
a qualified HSA health plan, you may be able to
fund a certain amount (indexed to go up each
year with family plans allowing roughly double
of an individual) into a separate tax-favored
checking account. You may be able to write this
money off at tax time and here's the bonus...you
can use these pre-tax funds to pay for eligible
medical and dental bills with no tax
implication. As an example, the maximum yearly
contribution is approximately $6K and for an individual, it's
$3K. Let's look at the individual situation.
If you fund the full amount each year (it's up
to you how much you fund), and your federal tax
rate is 30%, that's $900 (30% of $3000) of real
after tax savings. Divide this by 12 and we can
say that your premium savings is roughly
$80/monthly. Once you take this into account
against other PPO plans, the HSA starts to look
real competitive. It used to be that the core
HSA health plans were priced much better than
other PPO plans but that's not the case any
more. You really need the tax savings to make
the numbers work unless....
 California HSA eligible
health plans
Today, HSA health plans
offer some of the lowest true max out of pockets
on the market. What does this mean? Most
PPO plans have a deductible and then you pay a
percentage (co-insurance) until you hit a
separate max out of pocket (may or may not
include the deductible depending on
plan/carrier). If you get a really big medical
bill, the real out of pocket might by
$7000-$9000 on mid-priced PPO plans. That's a
big number. Many of the popular HSA plans
today make the deductible and the max out of
pocket the same number. This means you may have
a cap of $4K or $6K on these plans. For some
California health care shoppers, that out of
pocket cap is more important than office copays
and prescription copays. This low cap is a key
driver for many HSA applicants. The tax
savings is a bonus for these people. A few
notes. Health insurance premiums
cannot be paid from the HSA account. The HSA accounts are not use it or lose
it. The amounts grow each year and interest and
investment are tax-deferred. Most large banks
or investment houses now administer HSA accounts
with debit cards and various investment
options. Wells Fargo has been a strong provider
of the actual HSA accounts. The allowed
expenses are actually extensive and follow the
Federal list of allowable medical expenses. You
can run your instant quote below (individual or
group) for all California
health plans including HSA and you can even
segregate just the HSA eligible plans with a
check box. This is a good summary introduction
to the world of HSA's but we're happy to walk
you through them as it pertains to your
situation. We also have analyzed current best
options for the HSA.
Best HSA Values on the current market
Everything is set to change Jan 1st 2014
but let's look at the plans that make sense now:
California Individual and Family
Market. Blue Shield's Savings $4000 and $6000 have
been the best value hand's down. They're generally the
lowest priced HSA plans on the market and we like the one
deductible/max out of pocket benefit with single deductibles
for each family member (up to two in a family). That
appears to be the only direction to go. You can quote
the Shield Savings Plans
here.
California Small Group Market.
The group market is a little tougher since there are so many
carriers and HSA plans available. It really comes down to a
company's demographics (age, area). Run your
group HSA quote and compare Health Net,
Shield, and Anthem which are usually strongest for the HSA
plans in terms of pricing and benefits.
Health Reform and HSA's
We have recent news that supports the
existence of HSA should continue after Jan 1st 2014 which is
the big transition to the California Health Exchange.
This is good news. The deductible may come down a bit
but we'll still be able to gain the tax advantages
associated with the HSA. You can find more
information here:
HSA
future in the Health Exchange.
Related Pages:
Health Reform HSA options in
California
Current California HSA individual
family health plans
Why high deductibles make sense
Individual deductibles versus family
cumulative deductibles for HSA in California
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