I would like to talk to you today about Florida Health Savings Account plans (Florida HSA). This is a type of health insurance plan that offers very low cost premiums with a somewhat higher deductible.
Many of you have discovered how great these plans can be and have already taken advantage of them. The rest of you still have a frame of mind that prevents you from buying these cost-saving Florida health insurance plans. You still think that you will be able to buy a plan with low co-pays, covers everything and has a $100 deductible. Then again, many of you still hold on to the hope that Santa Claus is a real person.
Let’s say you are sitting in your living room and a baseball flies through the window. It breaks a pane of glass. You call to have it repaired and the charges total $100. Your homeowner’s policy has a $5,000 deductible so you pay out of pocket.
Chances are you do not spend the next day shouting about your rotten homeowner’s policy that would not reimburse you the $100. Chances are that you do not shout at your home owner’s insurance agent about “What the hell do I pay premiums for?”
Why? It is because you bought the policy to help pay for the things that can happen to a home that cost a lot of money. Situations like a fire or a hurricane. You are smart enough to know that if they paid for the broken window, your homeowner’s plan would be even more outrageously expensive than it already is. You can pay for the window and your children will still eat tomorrow.
The purpose of insurance, any type of insurance, is to provide financial help for those situations that would be a hardship if we had to pay out of own pockets. The degree to which you want to be protected, in other words the amount of compensation you receive and the deductible (the amount you have to pay before the insurance company does), will determine how much you pay for insurance. It is as simple as that.
Those of you looking for a Florida health insurance plan with $10 co-pays, $100 deductibles, vision, dental and a limo to pick you up and take you to the doctor are living in a dream world. Health insurance premiums in Florida, in case you did not notice, are going up each year 8% to 20% depending on the carrier and plan.
Now, let’s talk about an intelligent solution. The rest of this discussion will assume a working knowledge of 4th grade arithmetic. You do NOT have to smarter than a 5th grader to understand all of this.
All of our HSA plans are PPO’s. In other words, if you go to a network provider (physician, lab, testing facility, etc.) you are entitled to the discounted PPO rate for services. You will pay the reduced rate the insurance company pays. A physician visit may be reduced from $100 down to $60 under these circumstances.
You pay a premium each month for the health insurance plan, just like any other Florida health insurance. However, this plan has a somewhat higher deductible and a lower monthly premium. If you meet the deductible, the insurance company pays the rest of your expenses. It is still multi-million dollar major medical coverage.
What about doctor’s visits and prescriptions? You pay them. But here is the catch. Uncle Sam allows you to set up a special savings account. This is an interest bearing account, the money is yours, and it does not disappear at the end of the year.
For every dollar you put into the savings account, you can take a dollar off of your gross income at tax time. Your “Uncle” is helping you to pay for your health insurance. You are paying medical expenses with pre-tax money.
Here is an example. A couple (Male 40 and Female 35) living in Pinellas County would pay $130 a month for a $6000 deductible HSA plan. A plan with a similar out of pocket expense and some doctor co-pays would be $270 a month.
For the privilege of paying a doctor visit for $35 instead of $60, it will cost them more than $1600 a year. From my stand point, that is insane. If something terrible happened to you, the coverage is the same. Actually, you would pay a little less in out-of-pocket expenses with the HSA plan.
If this couple were in a 25% tax bracket and put the $1600 into their Health Savings Account, they would save $400 a year in taxes and get interest on the money as well. If you factor that in, they are paying less than $100 a month for multi-million dollar PPO Florida health insurance. Not bad.