Typical example of how an HSA plan can save a family thousands of dollars a year
In this real-life example from our case files, this family from metro Atlanta 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 $750/month (from $620), they contacted our agency for quotes on high deductible health plans.
Immediately, we recognized that they were ideally qualified 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 plan with a $10,000 family deductible that decreases by 20% every year (until a claim is filed in excess of the then-current deductible amount). In addition, we recommended that they include an accident benefit plan that effectively decreases their deductible to $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 and only $8,000 for any illness-related expenses after one year, reduced again to $6,000 after two years, etc. (due to the decreasing deductible feature).
Here is a graphic breakdown of the plan changes we recommended for them:
| |
Old
Plan
|
HSA
Plan |
|
$3,000
(per person, max of 3 per year)
|
Sickness
$10,000
(per family) |
Accidents
$100
|
Co-insurance |
80%/20% of next $10,000
(per person, max of 3 per year)
|
100% after deductible is met, in or out of hospital, including Rx drugs, etc. |
Total Exposure Amount |
$15,000*
($5,000 per person x 3/year) |
$10,000 - sickness**
$ 100 - accident
--------------
**$8,000 after 1st year
$6,000 after 2nd year
$4,000 after 3rd year |
Premiums Paid |
$9,000 |
$4,380 |
Premium Savings |
n/a |
$4,620 |
Tax Savings
(on
HSA deposits)
|
$0 |
$1,624
($5,800 HSA deposit x 28%)
Note that $4,620 of the $5,800 deposit came from premiums saved from the prior plan |
Net
savings with HSA health savings account plan |
$6,244 |
*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, except that optional co-pays may be included for preventative care. 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. |
How cool is this? Did you 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:
Because if they remain healthy, they get to keep all of the money they are saving (over $6,000 a year in this example). And 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. (But note that the out-of-pocket expenses for accidents are dramatically lower under the HSA plan recommended by our agency and with the decreasing deductible feature, the potential exposure for illness-related expenses actually decreases every year.)
Any 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 "Get Quotes" button on the top right hand column.
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