Health Savings Accounts (HSAs) 

We are very excited about the newly developed Health Savings Accounts. This type of insurance is much more affordable than a typical HMO, though it comes with much more responsibility on the part of the consumer. There are several has “look-alikes” so be careful what you purchase, and be sure you understand the details. Discuss this with your insurance benefits manager, and we can help answer some questions. Do not be confused by Health Reimbursement Accounts (HRAs) or cafeteria plans. They are not the same. It is worth spending some time reviewing HSAinsider.com or HSAdecisions.org

With HSAs, YOU have control how you spend your health care dollars for “everyday” health expenditures, not your insurance company. This is called a consumer driven health care model and I believe that this will change the face of health care over the next few years. When consumers know how much things cost compared to the charges, and THEY are responsible for the payments, there will be a revolt. Hospitals and labs will knuckle under to the pressure of millions of consumers and charges will come down to what the market will bear. Costs are inflated because a third party is using your dollars to buy service, and they are not as thrifty as you would be. Also, there is no correlation in health care to good quality care and cost. I believe that if doctors and hospitals can prove that they have superior outcomes, fewer complications or errors, and better customer service that they should be allowed to have higher fees. This is currently not the case. Maybe one day when consumers decide what they will pay for care, this can be reflected.

So, how does an HSA work? Basically, you carry two umbrellas at the same time. Under one, you have a high deductible catastrophic policy with a minimum deductible of $1000 to $2000. This covers you in the event of a serious illness or hospitalization. The second umbrella is a savings account to cover your day-to-day health care. However, these are unusual and very valuable dollars, in what I call the trifecta of spending. First, it is pre-tax dollars that go into the account. Second, dollars earn interest while they are in the account. Third (thanks to new legislation last year) the unused money rolls over from year to year to year, and it comes out TAX-FREE when spent on any health care expenses!!! These are your dollars to spend on health care and medicine. Most people will want to get the most “bang for your buck”, and will likely shop around for bargains. I strongly believe that pharmacies and hospitals and specialists will all drop their prices when they can be paid in full up front with no need to have billing and insurance personnel spending hours collecting the dollars for them.

Right now in Georgia, HSAs are not generally a good deal. The cost is still too great. When the premium difference between an HMO and an HSA is more than 40 or 50% we should all consider them. Right now the differential is around 15 or 20%, so wait. But keep looking, and soon many of us will have this kind of insurance, making more dollars in our pocket and your doctor's office visit completely affordable using HSA “cash”.