California Health Insurance Quotes and Blog

Not many people really know that much about Health Savings Accounts.
Knowing more will show you how valuable they can be for you and your family.

In 2003, Health Savings Accounts (HSAs) came into effect. They were launched as the greatest thing since sliced bread and promoted heavily.
Five years later many people still aren’t as informed as they should be about Health Savings Accounts and how they work.

As part of the Medicare Prescription Drug, Improvement and Modernization Act, HAS’s help US citizens under 65 save money for qualified medical expenses on a tax-advantaged basis. People who purchase a qualified High Deductible Health Plan may open a Health Savings Account. The money deposited into the HAS may be deducted from your taxable income at the end of the year. The nice thing is premiums for HAS qualified health insurance plans are much lower when compared to regular PPO and HMO insurance plans.

The tax benefits you can accrue with HSAs are:
• deposits and earnings aren’t taxed and
• there is no “use it or lose it” qualifier
• Money you save in the account isn’t taxed upon withdrawal if you use the money for qualified health expenses.

The HSAs are portable, you are the owner. If you have an HSA with an employer and you leave that employer, the money you have saved in the HSA is still yours. Many people confuse MSA’s (Medical savings Accounts) which are employer owned with HSA,s (Health Savings Accounts) which are owned by the individual employees.

Since HSA’s are owned by the individual they are totally flexible. Of course you must have a Qualifies High Deductible Health Plan (HDHP) in force when you want to make any deposits. Many people who have HDHP never open an HSA. But when they do they can deposit as little or as much as they want up the limits set the IRS. If you’re looking for flexibility in terms of payments, then a Health Savings Plan might just suit your budget.

The second way to contribute to a health savings plan is your employer may make non-taxable contributions for you. Or employers with cafeteria plans may allow workers to contribute untaxed salary through a reduction in salary.

If you’re 55 or older, you can make catch-up contributions to your account. This might sound similar to an IRA, and that’s because it is similar. Funds in the account grow tax-free and there are penalties for withdrawing the money for non-medical purposes. When you do turn 65 you can withdraw the money and it will be taxed as regular income. But, if after you are 65 years old, and you use the money in your HSA for medical expenses, you can withdraw the money and not be taxed.

Because of their flexibility HSAs can come in real handy. They’re well worth considering for protecting yourself when you most need it. So if you don’t have health insurance and need it, take a look at a HDHP and then supplement it with a health savings account. Find out if this is the perfect coverage for you by talking to a qualified health insurance broker who can guide you through the process.

Cindy Ehnes, director of the state Department of Managed Healthcare, wrote an article in Capitol Weekly describing how California will be cracking down on fraudulent discount health plans. California will be posing new regulations to license company’s, imposing strict consumer protections for those wishing to sell their discount plans in California. The department issued an alert, warning Californians of deceptive discount health plans and suggesting questions to ask. The alert is available in English and Spanish at www.hmohelp.ca.gov. In 2007 the DMHC received more than 200 consumer complaints about discount health plans, almost one third of which were because the consumer believed the discount plan to be insurance. “In the past month, we have seen a substantial increase in the number of complaints regarding discount plans, so it would appear that some fraudulent companies may once again be marketing heavily in California” she said.

A discount health plan is not health insurance. A “discount plan” is provided by organizations that arrange discounts for medical services, often issuing a card to you for that purpose. And the providers are not obligated to accept the discount plan, so not all doctors and facilities participate. Be very cautious and thoroughly research any discount health plan you are considering.

This is something that may shock you! Insurance is a business, not a charity, which is why a growing number of people are in the ranks of the uninsurable. They are there as a consequence of their own actions.

If you were an insurance company who could provide a health care insurance plan to someone for $86 a month, but that someone was taking a brand name drug for something that cost $230 a month, what insurance company in the world would want this person as a client? They would lose money on them before they even got coverage. Yes, the bottom line is this: insurance is a business, and consumers must wake up and smell the coffee.

Smelling the coffee involves understanding how the health care system is being over-utilized for things it was never supposed to be covering. When health care insurance was brought into existence, the intention behind the business was for citizens to use insurance for the “big things” in life – broken legs, heart operations, etc.

Now the system is being over-used, and often abused, as consumers run to the doctor for every little cut and bump without regard for the enormous costs incurred by consulting with a specialist. If a patient goes to the doctor and says they just saw a certain drug on TV and wondered if it could help, and the doctor consents to try it, that patient has just started taking a brand name drug, and is now classified as having a pre-existing condition.

Is this a two-way street? In this example both the doctor (who should likely know better) and the patient have created a situation where the patient will not quality for heath care insurance. The patient will soon face a dilemma if they are uninsurable – what about the “big things” that happen, leading to a genuine need for the health care system? Where will they be without insurance? The unfortunate answer is: in a major financial crunch.

The moral of the story is: think twice before you run to the doctor for everything that ails you because the price could very well be an inability to get health insurance in the future. Also, over usage of policies by the policy holders is an expense that is shared with rate increases.

For more information please visit www.mattsinsurance4ca.com or contact Matt Lockard by email at matt@mattsinsurance4ca.com