HSA plan has higher premiums!?!

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PostPosted: Fri Nov 07, 2008 5:10 am   Post subject: HSA plan has higher premiums!?!  

I am recently self employed and shopping for family health insurance for myself (38 yo), my wife (35 yo), and my daughter (6 yo), all healthy. We live in the fine State of Oregon.



I have read Paul Zane Pilzer's book: "The New Health Insurance Solution" and was very interested in his discussion and endorsement of Health Savings Account High-Deductible health insurance plans.



However, in researching different types of plans (including HSA plans) on ehealthinsurance.com, many of the estimated premium quotes I am getting on HSA qualified plans are $50-106 more expensive than a comparable non-HSA plan with a roughly equivalent deductible.



Please see this link below for my quote details (it was too involved to place in this post):



tinyurl.com/6la83j



The only reason I can see is perhaps the difference in the annual deductibles. Although they all tout deductibles in the $2200-$2500 range, the non-HSA plans seem to be indicating that is 'per-person' whereas the HSA plans are 'total family' deductibles.



Am I analyzing this correctly? If so, are HSA's still a good 'value'?



Thanks,

SMB



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PostPosted: Fri Nov 07, 2008 9:25 am   Post subject:   

I'm not an expert of health insurance, hence, don't want to misguide you. Hope an expert community member will soon drop into this thread to help you clear the confusion.

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PostPosted: Fri Nov 07, 2008 10:06 am   Post subject:   

The HSA plans are much less expensive that the traditional health plans, especially when you equate the risks. Its said that policy holders may use their copay health plans more casually than HSA plans, since they want to receive full value of the money. The co-pay plans premium may increase by 30% to 35% in latter years, because of the misuse of the benefits, whereas, the price for the HSA plan may increase only by 4% to 7% depending upon your age and type of plan.


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PostPosted: Wed Nov 12, 2008 1:24 am   Post subject: HSA  

The HSA has a per-family deductible. I wouldn't pay more for it than a standard 80/20 plan even with the advantage of putting away money pretax for small medical costs.



You need an independent agent in your area to help you discern the plans.

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PostPosted: Tue Nov 25, 2008 8:57 pm   Post subject: HDHP vs. HSA plan  

I have seen this metnioned before and simply do not understand why. There really is no such thing as a HSA Plan. HSA or Health Savings Account is basically a limited use bank account. It is an independant bank account that allows you to take pre tax income and place it in an account that can only be used for qualified medical expenses, Cobra premiums, Long Term Care Insurance, health insurance premiums (only if individual is receiving unemployment comp) or retiree health insurance premiums (medicare). It has nothing to do with Health Insurance in general. Being in a QHDHP or a Qualified High Deductible Health Plan allows you to start a Health Savings Account. You cannot contribute or begin a Health Savings Account without being enrolled in a QHDHP. According to the Internal Revenue Code, in order to qualify to open an HSA, a QHDHP minimum deductible must be at least $1,000 (self-only coverage) or $2,000 (family coverage). The annual out-of-pocket (including deductibles and copays) cannot exceed $5,100 (self-only coverage) or $10,200 (family coverage). QHDHPs can have first dollar coverage (no deductible) for preventive care and apply higher out-of-pocket limits (and copays & coinsurance) for non-network services. These are often referred to as Consumer Driven Plans as the case in Mr. Pilzer's book. And yes, the premiums for such plans are usually much less as the policyholder is reponsible for paying all costs (except preventive care on most plans) until they reach their deductible. Sorry for the long response but I have heard this metnioned several times.


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PostPosted: Sun Nov 30, 2008 6:52 pm   Post subject:   

Keep in mind, that when people mentions HSAs, they are actually referring to the entire contract, not just the side account. Just human nature.



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PostPosted: Mon Dec 01, 2008 4:22 pm   Post subject: "Entire Contract"  

Contract? There is no contract to hold an HSA with a HDHP. I can enroll in an HDHP without holding a Health Savings Account. In fact, there are many circumstances in which I cannot hold an HSA while enrolled in a HDHP(If I am enrolled in a secondary coverage HMO for isntance). Hence my point. They may refer to it as a HSA plan, but they are using incorrect terminology.


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PostPosted: Thu Feb 19, 2009 1:25 pm   Post subject: HSA premiums vs standard high deductable policy premiums  

I have recently encountered the same situation. If you compare apples to apples, an HSA to a standard high deductable plan with no co-pay or prescription cards, the premiums are higher (almost 20% on the quotes I received) for the HSA. Most people that tout the HSA plans as money savers are compairing low deductable plans or plans with prescription cards and co-pay to HSA plans. The difference between standard high deductable plans and an HSA is the out of pocket expense of both plans, which is usually less with an HSA with 2 deductables per family compared to 3 with a standard plan. Also you have tax savings with the HSA as you can pay for many things pre-tax out of your account. But these savings have to be enough to override the increased premiums. Most insurance people tell you an HSA is cheaper, but I got quotes on the same plans, and the HSA premium was always higher! I questioned all 3 agents as to why and still have not received a satisfactory answer. These quotes were for a family of 5 with no pre-existing conditions and in good health. Although I would love to have an HSA for tax purposes, as I could roll my IRA money to establish the account, I still don't believe it would justify the increased premium costs over my existing high deductable plan. Any commentsare welcome.


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PostPosted: Thu Mar 05, 2009 5:32 pm   Post subject: Same find here  

I've found the same thing. Comparison of plans with those having the HSA option were plans are virtually identical having a CONSISTENTLY HIGHER PREMIUM.



There are many factors that could be influencing this. It could be that people with HSA option plans are more likely to use that insurance. I spoke with an agent a while back and was told that higher income earners are opting for HSA plans knowing they will max their accounts with health expenses.



I'm also wondering if insurers have been tasked with additional compliance requirements on HSA option plans by Uncle Sam. Do not know but that could push up admin costs.



Then there is this weird industry thing where various insurers use pricing to gain market share - and that gets very complicated.



While it seem OBVIOUS the plans should not be more right now (at least in Texas) they are... one more of the world's unsolvable mysteries.


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PostPosted: Sat Apr 11, 2009 9:35 pm   Post subject: HSA accounts deposits are tax deductible  

The main difference I've encountered is that I can deduct the money I put into the HSA savings account on my taxes, whereas prior to signing up for an HSA my healthcare costs for the year never exceeded the percentage required (I think something like 7%) so I couldn't deduct them. I also get to pay for dental through my HSA even though I don't have dental insurance. All of my healthcare costs, besides premiums are paid with my money pretax, so it goes a bit further.


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PostPosted: Tue Apr 14, 2009 1:49 am   Post subject:   

Put properly, it should be an HDHP coupled with an HSA. You absolutely can have an HDHP without an accompanying HSA. The HSA is, as previously explained, nothing more than a tax-advantaged savings account that can only be used for specific purposes and can be withdrawn 100% tax-free for qualified medical expenses. The deductible and amount of contributions for HSAs is limited by federal law. For 2009:



* The minimum deductible is $1150 for individuals and $2300 for families.



* The maximum contribution limit is $3000 for individuals and $5950 for families plus a $1000 "catch-up" additional contribution for age 55 and older. If both spouses are 55+, the catch-up may be used twice for a second HSA.



* The maximum out-of-pocket is $5600 for individuals and $11,200 for families



The HSA can be rolled from year to year, and can be withdrawn for any reason after age 59 1/2 without penalty; just pay the taxes. Prior to 59 1/2 disallowed withdrawals are taxed + a 10% penalty. So, if you haven't used your HSA funds when you retire, you can use them in a manner similar to other qualified retirement accounts.



I, too, have compared premiums with traditional plans vs. HDHP/HSA combos. The only advantage that I can see would be the pre-tax savings and tax-deferred growth afforded throught the HSA. Traditional higher-deductible and/or co-pay plan premiums are comparable, and commonly even less costly than HDHPs associated with HSAs.



Remember, the whole idea of HDHPs was to SAVE YOU MONEY. QuestionQuestion



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PostPosted: Wed Apr 22, 2009 9:04 pm   Post subject: I have the same question! Why do QHDHP plans cost more?  

I have the exact same question, and after reading all of these responses, I still don't understand why there is such a huge difference. I fully understand the benefits of getting a Qualified High Deductible Plan and getting an HSA. However, when I run the numbers after accounting for higher monthly premiums, its close to a wash with the traditional HDHP plan. I am in Minnesota and have looked at quotes from three major area providers: Blue Cross Blue Shield of Minnesota, HealthPartners, and Medica. Let me provide an example of the Blue Cross Quote comparisons:

Myself (33), My Wife (33) and our Baby daughter (1), all non-smokers, exclude mental coverage.



Personal Blue 80 (Non HSA Qualifying)

Family Deductible: $2500

Family Max Out of Pocket: $4500

Accord Network

Prescriptions: Generics $5 Brands are 20% after deductible

Preventive: First $200 covered

Total Monthly Premium: $390



Options Blue 80 (Qualifying HDHP)

Family Deductible: $2600

Family Max Out of Pocket: $5200

Same Accord Network

Prescriptions: All 20% after deductible (no $5 generics)

Preventive: First $300 covered (instead of $200)

Total Monthly Premium: $506.50



All other plan items are EXACTLY the same. Why does the QHDHP plan premiums cost $116.50 more per month? That’s $1398 per year! Also, the QHDHP plan has a $700 higher out of pocket max. All of the other Insurance plans had very similar spreads between the Qualifying and non-qualifying equivalents.



Now, if I max out my HSA at $5900, and I assume a 30% tax rate, I should see tax savings of $1770 per year or monthly savings of $147.50. So in the end, I am saving $31 a month with the HSA ASSUMING that we eventually spend every dollar in our HSA over our lifetimes.



Being the bleeding-heart liberal that I am, I’m having a tough time deciding if I should just pay the cheaper premiums with the non qualifying plan and let Uncle Sam take my money instead of letting the Insurance Company take it in the form of higher premiums.



Can somebody please tell me I’m doing something wrong? How can this be reality? It’s annoying when all I hear and read about is how GREAT these HSA plans are. They always talk about the tax benefits, but I have never heard anybody talk about how much more expensive the qualifying plans are in relation to nearly identical non-qualifying plans. Am I missing something here?



ONE LAST QUESTION: What are the requirements to make a plan qualify for an HSA? In my example above, why does one plan qualify while the other does not???


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PostPosted: Thu Apr 23, 2009 9:15 am   Post subject:   

The HSA qualifying HDHP plans are allowing you put your money in an account where its tax free. Also withdrawals from this account would receive tax benefits. With the HDHP plans you are not only paying higher deductible but are also paying more on monthly premiums.



Now, you haven’t exhausted the amount available at your HSA account, the money would then roll over to the next year and you would continue receiving tax advantages on it.



Some QHDHP plans offer wider rage of benefits once the limit of HSA account is met.



Hope this clears some of your confusions.

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PostPosted: Thu Apr 23, 2009 10:07 am   Post subject:   

Another benefit with the HSA plan is that it allows you to save and spend for your healthcare without paying tax on the amount upon your retirement.


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PostPosted: Thu Apr 23, 2009 12:59 pm   Post subject:   

Kelvin and Karen,

I'm not sure you understood my post. I fully understand all of the tax shelter benefits of an HSA. My question is this: Why do two plans which are Identical in every respect except for the 'HSA Qualifying' element, price out so differently. Why do insurance companies charge significantly higher premiums on the HSA qualifying plans when comparing apples to apples with traditioal HDHP plans?



Kelvin,

You said ... "With the HDHP plans you are not only paying higher deductible but are also paying more on monthly premiums. "



I'm confused. Are you talking about HSA qualifying HDHP plans, or are you talking about non-qualifying HDHP plans? In all of my research, the HSA Qualifying plan has significantly higher monthly premiums at the same deductible and equal level of benefits. I fully realize that once the tax shelter benefits are priced out, the HSA qualifying plan is slightly cheaper (If you eventually spend every single HSA dollar over the course of your lifetime). However, I am looking for a reasonable explanation for why Insurance companies charge so much more for the HSA Qualifying plans.


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