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How to make high-deductible healthcare work for you

By Michael K. Shumer    

Even if Congress passes an anticipated healthcare bill, consumers and businesses willMedical Records & Stethoscope not experience immediate changes in plans or premiums. One of the ways companies are coping with escalating healthcare premiums is through high-deductible plans, which provide some relief.

Although these plans are more affordable for businesses, they can be costly for employees.

Because high-deductible plans require employees to pay $1,150 or more (depending upon the plan) before any coverage begins, employees often do not seek care when they are sick. They also bypass preventive care, which could prevent illness (and its subsequent costs).

This chasm in care undermines the economy by driving up absenteeism in the workplace and burdening healthcare providers with unpaid bills that erode profitability. Neither employers nor workers alone are able to pay for care in many cases, but employers can help by considering several alternatives:

• Choose wisely. When you select a plan, choose the best value for the money—for you and your employees. Just increasing the deductible does not always provide the same relative decrease in premium cost. Your agent or broker can provide quotes that compare the spectrum of policies from low to high deductibles. The goal is to identify the price point with the best value.

• Make it easier for employees to seek needed care. High-deductible plans—also known as consumer-driven plans— are a great way to reduce premiums, but unless employees have some way to bridge the gap between the high deduction and out-of-pocket expenses, they may postpone getting needed care.

Health savings accounts (HSAs) are one way to help bridge that gap. (See sidebar.) Some employers contribute to employees’ HSAs. Others look for high-quality, but less expensive, options to pair with the high-deductible insurance which can be coupled with a high-deductible insurance plan. These limited-health or “mini-med” plans low-cost plans are intended to cover routine or preventive care only (as opposed to catastrophic care). These plans encourage employees to receive care without worrying about the deductible.

• Think prevention. Stopping an illness or disease before it starts makes better business sense than spending for an expensive sure. As you explore healthcare options, determine whether a high-deductible plan includes preventative care. Some plans allow employees to receive preventative care for little or no expense outside of the deductible. When you start a new plan, educate employees about this benefit.

By considering these factors, you can provide the quality care that their employees need, at prices that your company and its workers can afford.

Michael K. Shumer is president of Crucial Care (www.crucialcarejax.com), a Southside medical facility that provides unscheduled care from treatment of the common cold to a heart attack.

SIDEBAR

What is a health savings account?

A health savings account (HSA) is an account that you can put money into to save for future medical expenses. There are certain advantages to putting money into these accounts, including favorable tax treatment. HSAs were signed into law by President Bush on December 8, 2003.

To contribute to an HAS, you must have an HAS-qualified “high deductible health plan (HDHP), have no other first-dollar medical coverage, are not enrolled in Medicare, and are not claimed as a dependent on someone else’s income tax return.

Contributions to your HSA can be made by you, your employer, or both. However, the total contributions are limited annually. If you make a contribution, you can deduct the contributions (even if you do not itemize deductions) when completing your federal income tax return.

Contributions to the account must stop once you are enrolled in Medicare. However, you can keep the money in your account and use it to pay for medical expenses tax-free.

You can use the funds in your account to pay for current medical expenses, including expenses that your insurance may not cover, or save the money in your account for future needs, such as health insurance or medical expenses if unemployed, medical expenses after retirement, out-of-pocket expenses when covered by Medicare, and long-term care expenses and insurance.

HSAs are also a way to save money for future medical expenses. They grow through investment earnings.

One of the advantages to an HSA is that you make all of the decisions about how much to put into your account, whether to save the account for future expenses or pay current medical expenses, which medical expenses to pay from the account, which company will hold the account, whether to invest any of the money in the account, and which investments to make.

Funds you put into the HSA remain in the account from year to year, just like an IRA. There are no “use it or lose it” rules for HSAs.

An HSA also provides you triple tax savings:

1. Tax deductions when you contribute to your account;

2. Tax-free earnings through investment; and,

3. Tax-free withdrawals for qualified medical expenses 


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