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Example of Savings Provided by an HSA Plan

In this real-life example from our case files, a Georgia family saved thousands by switching to an HSA plan. Ted and Alice Stephens (we changed their last name for privacy) are a couple in their 40's living in an Atlanta suburb with their 2 pre-teen children. When their health plan jumped to $850/month (from $670), they contacted our agency for quotes on high deductible health plans.

Immediately, we recognized that they were ideal candidates for an HSA family plan. Although many factors go into that determination, key factors include:

  • •they pay all of their own premiums
  • •they rarely use medical services, and
  • •they are in a relatively high federal tax bracket

In this particular case, we recommended a larger-end deductible plan with a $10,000 family deductible. In addition, we recommended that they include an accident benefit plan that effectively decreases their deductible to a $100 in the event anyone has an accident and is treated either in or out of the hospital. This made their total exposure only $100 for any accident. (note: this is an example of the HSA-combo plan discussed on another page found here: Click here to learn about the HSA-combo plan)

The premium on the new high deductible plan was approximately $310/month. The accident plan added $55, for a total monthly premium of $365 for the combo plan.

Here is a graphic breakdown of the savings achieved by replacing the high cost "co-pay" plan with a new HSA high deductible plan, with an accident rider (the HSA-combo plan):

  Old Plan
HSA Plan
Annual Deductible
$3,000
(per person, up to 3 per year)

Sickness
$10,000
(per family)


Accidents
$100

Co-insurance
80%/20% of next $10,000
(per person, up to 3 per year)
100% after deductible is met, in or out of hospital, including Rx drugs, etc.
Total Exposure
$15,000*
($5,000 per person x 3/year)
$10,000 - sickness

$100 - accident
Annual Premium
$10,200 $4,380
Premium Savings
n/a $5,820

Tax Savings
(on HSA deposits)

$0
$1,708
($6,100 HSA deposit x 28%)
$5,620 of the $6,100 deposit came from premiums saved from the prior plan
Net savings with HSA health savings account plan
$7,528
*The old plan also included co-pays for Dr's visits ($30) and Rx drugs ($15-generic). By law, an HSA plan includes no pre-deductible co-pays for routine care or treatment. Incidentals such as dental, eyecare, etc., would entail additional expenses under each plan and have been omitted for simplicity. Under an HSA plan, many expenses including dental and eyecare can be paid with tax-free HSA dollars. Different insurers offer different HSA plan options.

Did you happen to notice how the family would actually be covering most of their routine medical bills under the HSA plan? They're be able to use premiums saved (from their old health plan) and taxes saved (from deposting their premium savings into a tax-deductible HSA account) to pay for routine medical bills under the HSA plan!

But what if they don't need to tap the account? What if they remain healthy?

Here's the secret as to why families are switching to HSA plans:
It's because if they remain healthy, they get to keep all of the money they are saving (over $7,000 a year in this example). In a worst-case scenario, they can use part of the premiums saved to pay any "gap" in out-of-pocket expenses between their old out-of-pocket maximum and any total out-of-pocket maxium under the new HSA plan. Note also that the out-of-pocket expenses for accidents are dramatically lower under the HSA-combo plan recommended by our agency - a mere $100.

Questions? Use the "contact" link at the top to drop us a line or give us a call. Or better yet, take 2 or 3 minutes to get quotes for high deductible plans by clicking on the green "GO" button toward the top of the page.