Health Insurance Vanishing Deductible
Vanishing deductible benefits are not for car insurance policies only. Health insurance providers are also offering policies with a deductible that decreases over time when the chosen limit has not been reached by the insured(s).
This is being done in an effort to make older health insurance polices more attractive and to retain healthy customers with the added benefit of lower out-of-pocket expenses.
The two most prominent providers offering this new benefit are Anthem Blue Cross Blue Shield and United Healthcare, but others are sure to follow. These two carriers always have the option of reducing or changing this benefit as it is not built into the policy for its lifetime.
Health Insurance Policies With A Vanishing Deductible
It is no secret that many healthy consumers reprice their health insurance each year in hopes of locking in lower premiums. If the deductible has been reduced by 20-50% however, then the lesser amount will need to factor into the search for a new policy.
In order to obtain an apples to apples premium comparison, the insured will need to compare matching deductibles. If their current plan has been in force long enough for the deductible to decrease, then a matching number would need to be chosen with the new carrier.
Like all insurance policies, premiums will need to be weighed against the potential for out-of-pocket expenses. Most consumers will usually put more weight on their premium payments, but this new metric may prevent some rapid policy changes.
How Does A Decreasing Deductible Work?
In a nutshell, policy deductibles will decrease by a predetermined percentage each year so long as the insured has not reached the allotted amount. In most cases, the maximum credit will be half of the chosen deductible.
If for instance, you chose a plan with a $5,000 deductible, then the maximum credit that could be earned over a three years time would be $2,500. Should you reach your deductible after three years, then the insurance company would credit you (or a family member) with $2,500 for not having reached your deductible in the past.
Insurance companies have different means of crediting the allotted amount, but it is a nice feature that rewards good health and frugal shopping for medical related expenses.
Anthem’s Deductible Credit Program
This benefit is simply designed to incentivize good health while retaining customers. The plan is free and available for those enrolled in traditional plans with a $2,500 deductible and those on their Lumenos HSA plans with a $3,000 or greater amount.
Each year that the insured does not reach their deductible, even if it’s only by $1, his or her plan’s deductible will decrease by 20% in the following year – up to a maximum of 50%. By year three, the deductible will be halved.
If the deductible is reached, Anthem cuts a check to the insured for the qualifying amount and the program starts over. Thus, the incentive to change policies after a couple of years is less. And consumers who don’t often meet their deductible may shop for less expensive health care providers to make sure they qualify for this credit in close circumstances. See their flyer here.
United Healthcare Deductible Credit Program
United Healthcare offers this benefit for all of their deductible choices. The credit cannot reduce a health savings account deductible below its required limit by law.
Unlike Anthem, they do not cut a check to the recipient, rather the plan credits 20% reduction each year, up to a maximum of 50%, for the insured. With either company, your maximum reduction can be 50% after only three years.
In essence, UHC is encouraging consumers to purchase more affordable plans with higher deductibles. Someone who chooses a very inexpensive plan with a $10,000 deductible can have that number to $5,000 in three years assuming reasonably good health.
This benefit might also affect when the insured chooses to have an elective surgery or procedure. It could save them thousands simply by waiting until their next policy anniversary if they are in nor harm by doing so.
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We are an independent life and health insurance agency offering direct, online enrollment with several carriers. It does not cost you an extra penny to place your business with us.
We will help you find the health insurance and deductible that best suits your needs.
Category: Health Insurance, Health Savings Accounts
Health Savings Accounts and Qualified Medical Expenses
You might purchase a health insurance policy that can be coupled with a health savings account simply to obtain lower monthly premiums. In exchange for covering more of the incidental expenses out of pocket with a HSA qualified plan, you can keep your individual or family health insurance more affordable.
Perhaps of more importance are the tax write-offs that accompany the contributions to your health savings account. Up to certain individual and family HSA yearly limits, you can write off all contributions. And of course, your deposits grow tax deferred based on the current internal rate of return or other chosen investment strategy in your account.
Health Savings Account Withdrawals
All withdrawals from a Health Savings Account are tax free so long as they are used for what the I.R.S. refers to as qualified medical expenses. In order to take full advantage of the tax savings afforded by your HSA, you need to know what constitutes a qualified medical expense.
The I.R.S. considers several products, procedures, programs and equipment to be qualified. Listed below is a sampling of both expenses large and small. For a full list, please visits the I.R.S. website and search form 502.
- Meeting your deductible, coinsurance, and copay amounts
- Prescriptions (generic and brand), insulin
- Dental expenditures, exams, braces, dentures, etc.
- Contact lenses, eye glasses and exams
- Laser eye surgery and vision correction
- Weight loss programs and smoking cessation
- Crutches, wheel chair, approved motorized devices
- Approved durable medical equipment
- Hearing aids and hearing exams
- Chiropractor and mental health visits
This is a long list, but not all inclusive. There are several other items that qualify as medically necessary expenditures that you can pay for with the funds in your health savings account.
Pay for All Approved and Qualified Expenses
It makes little sense to save money in your HSA if you are not later using the funds to pay for approved expenses. If you later closed your HSA, then all the funds that had accumulated in your account would be distributed as taxable income once withdrawn. If you have not been using your account for even the smallest of expenses, then you are not taking full advantage of the tax savings.
Of course, you may only wish to save enough to meet your deductible or coinsurance amounts should you ever need to pay them. However, it is fiscally responsible to save more than these combined amounts and withdraw your accumulated funds for any and all approved medical expenses.
Setup Your HSA – Contribute Retroactively
You may like the lower health insurance premiums associated with a HSA, but are not sure about creating the actual savings account. It is a good idea to go ahead and setup the account with a local bank or one affiliated with your chosen health insurance company.
Even if you decide to put in a minimal amount, only for the purpose of creating the account, you can later fund your HSA retroactively. For example, if you setup a HSA with $50, but then later had $2500 in medical expenses, the account would already be created and could later be funded before paying the anticipated doctor and/or hospital fees.
If you have not setup and funded your HSA, then you would not be able to write off the anticipated expenses that had already occurred. Thus, it is wise to at least create and then fund your account with a small amount. You can later add to it if needed.
Do I Have to Setup a Health Savings Account?
There are no rules stating that you must setup a HSA if your health insurance coverage allows for it. Your monthly premiums would only pay for the health insurance itself. Any funds deposited into a health savings account are in addition to the monthly premiums with the insurance company.
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Hyers and Assoc. is an independent insurance agency serving several states and providing health insurance quotes and enrollment services direct. We represent many national carriers including Aetna, Anthem, Assurant, Medcial Mutual, Golden Rule, Humana, United Healthcare and others.
Contact us for more information about health insurance plans offering a health savings account.
Category: Health Insurance, Health Savings Accounts
Health Savings Account Enhancements
In an attempt to make health insurance and health savings accounts more attractive to consumers and businesses, Congress has revised HSA legislation in 2007. The new laws make HSA’s for individuals, families and businesses more beneficial which may likely increase the popularity of these plans.
The intended result may be that more Americans purchase high deductible health insurance/HSA plans over traditional insurance. The affordability of these plans could decrease the number of uninsured consumers across America.
1. Account Holders Can Contribute More Money
HSA contributions are no longer limited by the deductible of the health insurance policy. Individuals account owners can contribute up to $3,050 while families can deposit up to a maximum of $6,150 as of 2011. Each year these amounts will increase.
Additionally, deposits are no longer limited by the 1/12th systematic contribution rule. Account holders can deposit the maximum allowance in a lump sum no matter when their insurance plan was purchased.
2. Account Holders May Transfer Tax Deferred Funds From an IRA to a HSA
HSA owners can now make a lump sum distribution from a qualified plan like an IRA (Individual Retirement Account). This would not be considered a taxable event by the Internal Revenue Service.
This way funds will be available immediately for qualified medical expenses. Should the owner not have access to a qualified plan, then s/he can contribute ordinary post-tax, non-qualified funds and write the contributions off for that taxable calendar year.
3. Employer/Employee Account Holders May Fund with Lump Sum Deposit
Employers and employees may make one-time, lump sum contributions to a qualified account such as a FSA (Flexible Spending Account), HRA (Health Reimbursement Arrangement) or Health Savings Account. As a result, qualifying group health insurance plans will be easier to manage.
This will be appealing to employers who are switching over from traditional plans as they will no longer need to make systematic contributions, but rather can do so one time per year. Again, funds will be available immediately for qualified medical expenses.
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These are the main benefits of the new legislation. They should make Health Savings Accounts less complicated to setup and maintain for individuals, families and businesses.
Additionally, increased contribution limits and funding options will allow consumers to save more for qualified health expenses on a tax advantaged basis.
Contact Us for a free health insurance consultation today.
Category: Health Insurance, Health Savings Accounts
Affordable Health Insurance Coverage
The most common question I am asked as an insurance broker is: “Who has the most affordable insurance plans?” My stock answer is: What benefits are you looking for? To which the customer might reply: “I want the best benefits I can purchase at the most affordable price.”
We live in a county where consumers want the best, but do not want to overpay unnecessarily for products or services. Fortunately, in the health insurance market there is ample competition among the insurers. With the recent introduction of health savings accounts, insurance premiums have decreased even more.
Health Insurance Benefits Determine Price
The benefits that you select, presumably the ones most important to you and your family, will determine the cost. Some consumers want a dental and vision plan, others want a maternity benefit and still others are looking for prescription drug coverage. With such a wide array of choices, it can be difficult to sift through the health insurance plans on your own.
In order to make this process easier, we have direct health insurance links on our site for consumers. Those looking to purchase health insurance in should find the process a little less intimidating. We will be happy to email you brochures from the various insurance providers and discuss a plan tailored to your needs and budget.
Our Health Insurance Providers
Not all plans are created equal, so if there is one benefit that it is very important to you, we can point you in the right direction. In addition, you can use our links to Aetna, Anthem Blue Cross Blue Shield, Assurant Life, Golden Rule, Humana, Medical Mutual and United Healthcare to research on your own.
The insurance industry is changing rapidly as the days of the door to door broker slowly fade away. The popularity tablets, laptops, and smart phones make it easier and quicker than ever for you and your family to obtain quality comprehensive health insurance coverage. Contact us today!
Category: Health Insurance, Health Savings Accounts
The Need for Medical Insurance Coverage
As the race for Governor heats up in Ohio, there is some tough talk from both camps on the need to get Ohioans insured. In our mind, it is doubtful that health insurance will become mandatory or that our state government will subsidize plans anytime soon, but opening a dialogue on this important topic is a start.
Editors Note: We were wrong. Health insurance is mandatory now.
It was not long ago that Massachusetts passed legislation requiring its residents to purchase health insurance and it may be that other states follow this groundbreaking precedent. Time will tell, but clearly governments are beginning to rethink their positions on this topic as large health related bills cut into their tight budgets.
Compare Medical Insurance Coverage Plans & Options
We have made it easier than ever to purchase coverage online and direct. By working with several carriers direct, we can offer plans with very basic benefits as well as plans which provide comprehensive coverage.
Additionally, we provide high deductible plans combined with health savings accounts for consumers wanting to utilize policies with tax advantages. Whether you shopping for a student, individual, family or a small business we can find an appropriate plan for you.
Insurance companies have made it very easy to compare plans by providing agencies like ours with links that allow consumers to research plans, compare prices, choose networks and ultimately purchase coverage online with no need for visits by the insurance man (or woman) or time consuming paperwork.
Contact us for more information today!
Category: Health Insurance, Health Savings Accounts