Richard Day

People are Changing to HSA type health plans - Why?

Health Savings Account (HSA) type plans have become much more popular in the last two years. Find out how these plans offer lower monthly rates and better tax savings.

In 2007, Health Savings Plans, (HSA) have been more widely accepted than in any years in the past. HSA plans were introduced on January 1, 2004, but they really were confusing to people who were trying to purchase health plans.

What has caused HSA plans to become more popular? There are many reasons, of course, but here are some of the more important ones:

* Agents have been properly trained

* Customers have experienced large increases in their traditional copay type plans

* Doctors are much more familiar with the HSA plans and their benefits

* Hospitals, drug stores and other providers understand them better

* Certified Public Accountants and financial advisers are explaining the benefits to their clients

* HSA type plans are much less expensive than copay plans - especially if you equate risks

In 2007, in North Carolina, there were two flu seasons. It is unusual to have two flu seasons in one year. In most years, influenza hits us just once. Because people with copay plans like to get their money's worth, they visited the doctors more frequently.

This is approximately what they were thinking...I spend X dollars per month on my health insurance, and I hardly ever use it. It only costs your copay to see the doctor and get help. Why wouldn't I take advantage of the plan I have paid for?

Consequently, the doctor visits and drug prescriptions for the year were almost doubled. The insurance companies had factored in a certain, normal number of doctor visits and drug purchases per year in the cost of their plans. When they found that people used the plans much more than they had calculated they would, they had to raise the premiums. Depending on your age, and the plan that you had purchased, the increases were in the range of 20% to 35%. That was a shock! People know that they need health insurance, but this was getting so expensive, they were worried that they couldn't sustain those increases. Many people investigated how they could cut their costs. The HSA plan was suggested as a solution by many informed agents.

Now, for the surprising part:

HSA type plans' premiums went up about 4 to 7% depending on your age and the plan you were on. Why the large difference?

Here is the line of thinking of someone who has an HSA type plan:

Catastrophic coverage is what they needed and therefore bought. They will personally take care of the small costs like doctor visits, drugs, and other expenses of that type. However, if they have something catastrophic happen to them such as a car accident, cancer, heart problems, and the list goes on, then they want a solid, secure, insurance company to carry those costs. Bankruptcy is not in their plans.

Therefore, when they got the flu, they were more reluctant to go to the doctor... it was going to cost them about $50 or $60 out of pocket to see the doctor. They thought, well, let's see. It has been a week so far...if my conditions haven't improved in a couple of weeks, I will go see the doctor. (This is just what several families have reported.)

Since the insurance companies where not affected very much by people on HSA type plans, they didn't have to raise their premiums much.

In summary: People who purchase HSA type plans pay less every month to protect themselves and their families. They have catastrophic coverage that will protect them from large losses. They understand that the best, most economical use of insurance is to cover the catastrophic event.

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