Did you read the article in USA Today on September 5, 2007 showing how some insurance companies have severe limitations that you should know about?
Here is my response:
Why is it that we look at health insurance so much different than any other type of insurance we purchase? Does our auto insurance cover oil changes and windshield wiper blades? Does our homeowners insurance cover our washer/dryer or furnace? Why is it we expect health insurance to cover every minor expense? The problem with our current health insurance system lies in how the services are delivered. What else in our free-enterprise society today is delivered in a “copay” system? Imagine buying a car and paying a $200 copay with someone else paying the rest. Would any of us be driving the same car we are today? Of course not! No wonder health care now consumes over 16% of our total GDP which is 60% more than Americans spend on housing!
With skyrocketing health insurance premiums companies such as Mega Life and Health can easily sell these limited policies to people because they get insurance that includes copays for doctor’s office visits and some prescription drug coverage at a much lower premium than comprehensive major medical plans.
There needs to be a change in vocabulary in order for people to understand how to purchase health insurance. Most comprehensive major medical health insurance plans have 3 moving parts consisting of deductible, coinsurance, and copays. These 3 combine to represent some sort of out-of-pocket maximum that is difficult to understand. Most plans do not even count copays towards this maximum. Those plans should be described as “unlimited” out-of-pocket. Other than the new HSA qualified major medical insurance plans, which are required by IRS guidelines to have maximum out-of-pocket limitations, it can be very difficult to understand how much is covered.
This is why you should consider an HSA qualified comprehensive major medical PPO insurance plan. Once you own a qualified insurance plan you are then allowed to open a triple tax-advantaged (pre-tax deposits, tax-deferred interest earned, and tax-free withdrawals for eligible medical expenses) HSA account. You then pay your smaller bills out of your HSA at the in-network PPO discount while retaining insurance in case of a larger expense. Whatever is left in your HSA account YOU KEEP! The insurance deductible is offset by your HSA so that your total out-of-pocket maximum is usually much lower than it is with traditional plans.
I have read many of Julie Appleby’s writings and she has mentioned HSAs on many occasions. Although most health insurance brokers are hesitant to recommend HSA designs experts are still predicting 10 million HSAs will be in use by 2008. HSAs provide a vested interest in saving health care dollars for possible future expenses, or if we never spend it, keep it to help supplement retirement income (think IRA).
I just wish the people victimized in this article had been given this information.
N. Scott Borden
OFM Benefits Consulting, LLC
6400 Glenwood, Suite 307
Overland Park, KS 66202
913-432-2732 ext. 105