FOR ME--A TRADITIONAL HEALTH PLAN OR A Plan that permits funding an HSA?

What's an HSA?

Health Savings Accounts (HSA's) can be used in conjunction with High Deductible Health Plans that have out-of pocket maximums for 2018 at or below $6,650 for individuals or $13,300 for families ($6,750  and $13,500 for families respectively for 2019) and that pay 100% of all covered expenses after the out-of-pocket maximum for the plan is met.

HIgher individual and family out-of-pocket maximums are permitted for 2018 and 2019 ACA plans BUT HSA's can not be established for any high deductible health plan that has out-of-pocket maximums that exceed the $6,650/$13,300 threshold for 2018 ($6750/$13,500 threshold for 2019).

Per Affordable Care Act requirements, these plans cover 100% of preventive care benefits without a deductible.  Some carriers cover preventive generic drugs for certain conditions (examples are high blood pressure and high cholesterol) as part of this preventative benefit.

If you're buying an Affordable Care Act plan and are concerned about protecting yourself against unexpected hospital or other catastrophic costs, purchasing a Bronze level High Deductible Health Plan plan, funding a health savings account plan, and coupling this with either a hospital indemnity plan and/or an accident plan may be a more cost effective way of lowering your overall premium and, in effect, reducing your deductible rather than buying a Silver, Gold or Platinum plan.

High Deductible Health Plans have a maximum single deductible AND family deductible ($6,650 AND $13,300 respectively for 2018 and $6,750/$13,500 for 2019). Note that higher deductible ACA plans are available in 2018 and also will be offered for 2019, BUT these plans can't qualify as High Deductible Health Plans and hence can't be coupled with an HSA.

People who establish an HSA account can fund that account with a bank or other financial institution and use that account (usually through use of a debit card) to pay for any qualified medical expense (generally any health, dental or vision care expense excluding cosmetic procedures). Annual contribution limits to an HSA are  $3,450 for a individual and $6,900 for a family (the IRS at one time reduced this from $6,850 but reinstituted the $6,900 maximum) in 2018.  (The limits are raised to $3,500 and $7,000 respectively for 2019). In addition, individuals age 55 or over can make "catch-up" contributions of $1,000, but only one catch up contribution can be made per HSA account.

Amounts contributed to a Health Savings Account are tax deductible. This means that someone who pays for an expense from his or her Health Savings Account saves the equivalent of that person's federal marginal tax rate (and state marginal tax rate in almost all states with state income taxes), including taxes for Social Security and Medicare.  For example, an individual who has a $1,000 expense to pay and who has a 32% federal marginal tax rate and no state income tax will actually only be paying $680 for the service if s/he pays that from his or her Health Savings Account.


How Does a Traditional Office Visit Copay Plan Work?

Traditional office visit copay plans have a copay for items like doctors' visits and a deductible (possibly with coinsurance thereafter) for major expenses like hospitalization. Traditionally, these plans had separate coverage for outpatient drug expenses, either with or without a deductible but with copays.  

Before 2014, people who had these kinds of plans had a separate deductible for health expenses and, in essence, a separate plan to pay for drugs. While the health care part of the plan usually had out-of-pocket limits, the drug portion of the plan often had no such limits.  Most of these plans required three separate family deductibles until the family deductible could be met.

The Affordable Care Act changed how these plans work. The ACA permits only one individual and a family deductible. Moreover, the drug portion of the plan counts against the maximum out-of-pocket limit, whereas formerly the drug plan operated essentially as a separate plan with or without an out-of-pocket maximum for drugs.

What Does This Mean For Me?

An individual or family purchasing an Affordable Care Act plan will normally have choices to select EITHER a High Deductible Health Plan (with or without a separate HSA account) or a traditional office visit copay plan.  Individuals who have always had traditional office visit copay plans may find that it's more cost effective to purchase a High Deductible Health Plan and fund a Health Savings Account.

HSA Versus Traditional Health Copay Plan Calculator

This tool developed by Waukesha State Bank is designed to help you compare a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) to a traditional copay health insurance plan. By using an HDHP/HSA solution, you can often realize significant savings on your insurance premiums and receive a deduction on your income taxes. You can also add a hospital indemnity plan and/or accident medical expense plan to reduce your exposure to high out-of-pocket expenses in the event of hospitalization and/or an accident. Use this calculator to determine the possible savings.  You can enter the type of plan you're interested in (HDHP or Traditional Office Visit Copay Plan) as well as indicate your interest in receiving a quote on a hospital indemnity plan or accident medical expense plan when you Request A Health Insurance Quote.