You’ll pay 100 percent of the cost of prescriptions, doctor visits and emergency room visits. You’ll also pay for the cost of surgeries and out-patient procedures.

If you’re considering a pregnancy, make sure there’s maternity coverage on your policy. There usually isn’t.

While a high-deductible plan can lower your overall health insurance costs while protecting you from unexpected and large medical bills, make sure you have your own plan to pay those initial out-of-pocket expenses. You’ll need a tax-deductible health savings account or your own savings plan to satisfy the deductible.

Research shows that people with high-deductible plans do cut their overall health care expenses. But they also tend to cut back on preventive health care such as childhood immunizations, cancer screenings and routine tests. This “penny wise and pound foolish” approach to medical care can be dangerous.

Essentially a form of catastrophic insurance, these plans charge a high annual deductible – from $1,000 to $5,000 and higher – in exchange for lower monthly premiums.

You’ll have to pay out-of-pocket costs for routine doctor’s office visits or trips to the emergency room until you hit your deductible. The insurance covers everything after that.

To help pay these out of pocket costs, it’s both wise and typical to pair your high-deductible plan with an IRS-qualified health savings account. You can make tax-free deposits into this account (even if you take the standard deductions and don’t itemize), up to $3,050 annually for individuals or $6,150 for family coverage. If you’re 55 or older, you can contribute an extra $1,000 a year.

This money is yours to withdraw, tax free, at any time, to pay for medical expenses that aren’t covered by your high-deductible policy.

High-deductible insurance is considered a consumer-driven health plan, giving the patients control over how to spend and invest their money.

The plans offer cost savings over plans because of the high deductible, and they protect you from catastrophic health events.

If you’re in good health, rarely need prescription drugs, don’t have a pre-existing condition and don’t intend to get pregnant, you might consider a high-deductible plan.*

Under those circumstances, you won’t have many out-of-pocket expenses. Meanwhile, you can relax and enjoy the comfort of having protection against any unexpected and expensive medical costs.

The only caveat: You should put aside enough money (typically from $1,000 to $5,000, depending on your policy), to cover your deductibles in case of an emergency.  That’s why pairing your high-deductible plan with an IRS qualified health savings account makes this combination attractive.

(*Note: Some plans have a one-year waiting period before they cover maternity care or pre-existing conditions.)

The health saving account is a high deductible health insurance plan.  All medical claims go towards the deductible for the exception of wellness. All preventive and wellness procedures are covered at 100% with no cost to the insured.  The best way to look at these plans is they are major medical policies that will cover you for the major claims and you are responsible for the small things. 

The health savings account makes it easier for families and individual to budget for health care expenses.  Once your deductible is satisfied then all eligible claims are covered at 100% depending on the plan design. With this plan there are also tax advantages.

I think everyone should look at this approach to health insurance. The health savings account engages people to look at their health care expense and I think that is very important. If you take advantage of online tools then you will discover that diagnostic test you  need has a huge cost difference. The hospital might charge $2,000 and an outpatient facility charges $400.  If the first $2,000 in claims comes out of your pocket I think you might want want to use the facility that charges less.

Now is the right time to entertain this approach to health insurance.

The Health Savings Accounts in Indiana have been much more popular than other states. There are few theories on why this is but I think it has alotto do with price. When Health Savings Accounts were first introduced they had savings in 30% -45% range from a traditional plan. Now one has to realize just 7 years ago lower deductible type plans were much more common. So switching to an H.S.A and then using the savings from the old plan to fund your H.S.A custodial account was a easy decisions.

The HSA plan was the 2nd step towards developing consumer driven insurance products. The first was the Medical Saving Account.  The HSA plan is a major medical policy which promotes consumerism be informing insured what the cost of medical services are. Since the insured is responsible for the deductible one becomes very aware of the cost of an office vistit, Brand name drugs, a trip to the ER and so on. These plans have really taken the first step in price war with health care provider. The best example of this is the drug prices between the pharmcies. When Walmart came out with the $4 generic its threatned the all the  major pharmacies. The pharmacies have started to compete from a price standpoint. Another huge step for consumerism is when Anthem and United HealthCare came out with their own version of the price shoper for the HSA clients. This tool truly has show the cost difference from what a hospital charges and what an outpatient facilty charges.

As we enter the 4th quarter of 2010 the HSA is still a very popular choice with individual & small groups. These plans are even gaining traction with large companies. 

For the individual health plan its by the far the best option. Why pay for benefits like a co pays that you  might not use.  A lot of people still say I don’t want to lose my co pays. The truth of the matter is when you see that primary care doctor you are still getting the network discount. That means those services are discounted anywhere from 35%-50%. So if you have a $100 office visit you might owe $50. When you compare the premium savings on an HSA it makes sense to go with that plan.  The RX benefit is where there can be real issues. If you are on a brand name drug and there is no generic then you end up paying for the cost of that drug and it chips a way at the deductible.  What people fail to realize is if you qualify for a individual plan with RX coverage the carrier will rate you up for that condition so you end up paying a much higher premium. When we compare the higher premium plan with the HSA plan and the cost of the drug there is a good chance the HSA makes more sense.   The fact of the matter no mater what individual plan you are on the premiums are going to go up at renewal but you have a much better chance of getting a single digit rate increase on a HSA.

The HSA for the small group is still a very good option. If a group is going that route its very important to include a min wellness program and price comparison tools  so that the employee can take an active role in their health care. Now in the small group market we have seen some problems with the H.S.A approach from cost stand point. 9 times out of 10 an HSA plan is a better plan than the current plan design. This is because the out of pocket for the employee can be much less than the traditional plan that has co insurance. So now an owner/controller is only seeing a 10% reduction in premium compared to the co pay plan that has 3 times the out of pocket.  The other reason why we are not seeing huge savings on the small group HSA plans is claims. Once an insured meets their deductible they now feel all treatments are free.  Even with this said the HSA is by far the best option for a small group health plan. Its one way that an owner can try to educate the employees on true health care cost while still proving the best coverage.

Large groups are starting to really entertain the HSA approach because of the consumer driven principles.  Many large groups are now adding an HSA option to their cafeteria plan. Data that has been collected over the last 6 year on these type of plan are showing a significant savings from a claims standpoint.

If you are looking for a new health insurance plan you have to entertain the health savings account.

To be considered qualified for an HSA, the HDHP must meet certain IRS regulations. 

For 2010, to qualify as an HDHP:

• The minimum deductible amount must be $1,200 for self-only coverage and $2,400 for family coverage; increased from 2009 requirements.
• The out-of-pocket maximum must be no higher than $5,950 for individual or $11,900 for family coverage; increased from 2009 requirements.
• The HDHP must be set up with a combined medical/pharmacy deductible. This deductible must apply to the out-of-pocket maximum; no change from 2009 requirements.
• All medical and pharmacy services must be subject to deductible and out-of-pocket maximum except for preventive services.

To view the 2010 HSA reference guidelines, click here.