Health insurance costs are at an all time high, and HSA plans should be at the top of your shopping list. Exchange plans feature lower premiums if you qualify for a federal subsidy. But for upper-income earners, the Marketplace plans are often more expensive than older grandfathered plans and last year's policies. So for many persons, a high deductible plan (HDHP) has become a viable solution for large and small companies that offer medical benefits to their employees. But the self-employed or anyone paying their own benefits can also benefit from favorable tax laws that impact HSAs.
With this type of policy, premiums are much lower than a conventional on or off-Exchange plan, although the subscriber must pay medical costs out of their own pocket up to a certain dollar amount (called a deductible) before the health insurance benefits will apply. However, until that point, a negotiated price reduction will reduce out-of-pocket expenses. And often, the negotiated savings is huge, easily saving hundreds or thousands of dollars. The cost of prescription drugs generic and non-generic) also is discounted.
For example, an X-ray with a cost of $250, may reduce to between $50 and $150, thanks to the insurance company's contract with the provider. The cost of a simple lab test or blood test may be reduced by as much as 90%. More expensive procedures, such as an MRI or CAT scan, will reduce in price by hundreds of dollars (and possibly thousands), depending on the scope of the test. Specialist visits and out-patient surgeries typically will receive large negotiated price reductions. It's not uncommon to see a major invasive surgery (and accompanying expenses) reduced from $50,000 to $30,000.
Qualified preventative expenses, such as routine annual physicals, OBGYN exams, and mammograms, are always covered at 100%. Many additional procedures, including a colonoscopy, are also covered with no out-of-pocket expenses. However if a polyp is discovered (cancerous or non-cancerous), typically the resulting treatment is not considered non-preventative. Followup procedures to preventative treatment also may not be covered at 100%, although benefits will be provided, even if it was a pre-existing condition.
Impact Of Obamacare
The ACA legislation (Obamacare) allows both individual and small business HSA plans to be compliant. Although they are not offered by as many companies and deductible choices have reduced, the overall concept has not changed and all tax reductions have remained in place. If you and/or most family members have no serious chronic medical conditions, there's a good chance an HSA will save you money, and reduce your tax liability when compared to other Marketplace options. In a worst case scenario, out-of-pocket expenses are capped, although a new deductible must be met each calendar year. Therefore, if an approved elective surgery is planned, it's best to have the operation performed in the beginning of the year, so a yearly deductible can be met.
If you are currently being treated for an illness that requires frequent testing, treatment and medication (and possibly a pending surgical procedure), a more cost-effective Exchange plan would be a better choice. A "Silver" Metal policy is ideal if your income is low enough to qualify for a substantial financial subsidy. Your deductible and copays could substantially reduce with "cost-sharing" benefits. However, your household income must meet specific Federal Poverty Level (FPL) guidelines. If household income drastically increases throughout the year (new job, bonus, or promotion), it is possible that the premium could increase because of a lower subsidy.
Most older HSAs were previously considered "grandfathered" and were allowed to remain active, despite not meeting the new guidelines. However, instead of age 26, children could only stay on these types of plans until they reached age 24. It is important to note that if you change the deductible or significantly alter the policy, you could jeopardize the grandfathered status. This could result in the forced placing of a new policy that is thousands of dollars more expensive, with possible higher out-of-pocket costs.
If you miss Open Enrollment (and millions of person do!), under certain circumstances, you can still purchase a subsidized (or unsubsidized) plan. However, you would have to meet one of the many "life events" that qualify for a special enrollment. For example, if your child turns 26 (while on your plan) or you no longer have benefits due to losing your job, these special circumstances would apply. Losing Medicaid eligibility may also qualify for an exception. Divorce, losing credible coverage, and moving to a different service area will also qualify, but you must enroll within the specified time limit.
Other exceptions include birth or adoption of a child, moving to or from a different service area, and a substantial change in income that impacts cost-sharing in a specific policy. You can contact us for the complete list. Proof of the event may be required, and projected income for the remainder of the year will be needed to determine eligibility and amount of subsidy. Only income from a current employer can be counted. Prospective job income can not be used for subsidy calculations.
All State Marketplaces offer several HSA options. Deductibles can be as high as $7,000 per person and $14,000 per household. This allows premiums to be quite low compared to other types of available policies. Blue Cross (Blue Shield), Humana, Kaiser, Cigna, and Aetna are five of the largest providers of this type of plan, although most contracts are offered as Group options through an employer. Many smaller regional carriers offer policies, including Medical Mutual in Ohio, and Geisinger in Pennsylvania.
How Does A High Deductible Plan Work?
High deductible plans (HDHPs) can vary in the amount of the deductible, but the Internal Revenue Service has set a minimum for 2021 of $1,400 for an individual and $2,800 for family coverage. Deductibles can be much higher (see above), depending on the plan that you choose. The maximum out-of-pocket expenses for HDHP plans in 2021 (premiums not included) is $7,000 for individuals and $14,000 for families. These plans are the cheapest, and typically found in the Bronze tier. Silver-tier HSAs are offered, although rates are higher, and deductibles are lower.
While the thought of facing thousands of dollars in health insurance costs for anyone may seem daunting, most people enrolled in a high deductible plan utilize a health savings account (HSA). Almost all large insurers offer these types of plans and they have grown in popularity since they were originally introduced. They remain popular today because you have time to build up your fund in years that you don't meet a deductible. The maximum annual contributions are $3,600 for a single plan, and $7,200 for a family plan. Of course, you can choose to contribute a lower amount, or simply make no contributions during the year. Once eligible for Medicare, additional contributions can not be made, although prior accumulated contributions can be used for qualified expenses. An additional $1,000 of "catch-up" contributions can be made for persons age 55 and above.
Your Optional Side Account
You can also change HDHP plans without changing your HSA side account. For example, if your HDHP policy was with Blue Cross for the entire year, and you decided to change to Kaiser during Open Enrollment (effective Jan st the following year), you would not need to change the bank account that you utilize for funding and dispersing qualified expenses. And if you maintained a banking relationship with them through other accounts, you are probably receiving several financial perks. Often, you build "points," which can be exchanged for gift cards and other available rewards. Occasionally, a waiver of administrative fees (if applicable) can be negotiated.
This "side" account is used to fund your deductible in the event that it is ever needed. The concept of an HSA is that deposit money in a savings account that is designated for use when paying your health insurance deductible. Once the deductible has been met, the health insurance plan usually will provide more comprehensive benefits, typically at 100%, assuming there is no coinsurance or copays to meet. If you need medical coverage for children, this type of contract can still be used since dependents can be included. NOTE: It is not unusual to have different coinsurance levels (see below).
Typically, there is a deductible to meet on non-preventive office visits or non-generic prescriptions. Specialist visits, ER visits, and Urgent Care visits will have higher deductibles. Occasionally, a copay, instead of a deductible, will apply. The coinsurance is the percentage of a claim that you pay after the deductible is met. It may be 10% or 20% (sometimes as much as 50%), and will have an out-of-pocket cap so that you are not paying an absorbent amount on a major claim. Naturally, a higher coinsurance will save money, since you are taking more risk. However, if you have a major claim, and easily meet the deductible, the coinsurance level does not impact your total out-of-pocket expenses.
Common deductible/coinsurance options are $6,900/0%, $6,400/0%, $6,400/30%, $5,250/0%, $5,250/30%, $5,000/0%, $5,000/20%, $4,000/50% and $4,000/20%. Of course, there are additional combinations offered by companies, depending on your residing state. 50% is typically the highest coinsurance offered. 20% is a benchmark and we don't recommend considering coinsurance above 30%. Generally, the most economical deductible for healthy families is $6,000 and above.
Why Would I Consider This Policy?
An important reason to move to a high deductible plan is that you will save a substantial amount of money on health insurance premiums. For example, you may have a choice between a conventional Marketplace medical plan that could cost twice as much as a high deductible plan. While you are saving thousands of dollars in premium, you may decide to contribute money into the side account that offers the flexibility of ownership and also the tax advantages. There are two ways (HSA and FSA) to accomplish this.
Health Savings Accounts
An HSA contains contributions made by you on a tax-free basis, to use toward medical, dental or vision expenses. Money that sits unused in this type of account builds interest over time. However, interest rates are currently very low, so the investment incentive is not large. But the safety of a fixed interest rate should never be under-appreciated. The highest current interest rate available is about 1.5%. Within the next five years, we expect the rate to creep above 2%, as long-term interest rates and bond yields increase.
Also available is a "Flexible Savings Account" (FSA). Money deposited into this type of contract is contributed on a "use it or lose it" basis, unlike an HSA where you can leave deposits alone without forfeiting them at the end of the year. This may explain the phenomenon of why consumers frantically buy glasses that they may not need during the last few weeks of December! Or perhaps they visit the dreaded dentist twice in the same month. Employers are allowed to offer a 2 1/2 month grace period to additional time to spend funds. An alternative is an immediate $500 carryover towards the following year. One, but not both options, can be made available by the employer.
FSA accounts are offered through selected employers, and allow you to pay for deductibles, copayments, coinsurance, prescription drugs and other medical expenses. Over-the-counter drugs must have a doctor's prescription, except for insulin. Many employers will deposit money into your account, although there is no obligation. The typical deposit is between $500 and $2,500 per year. The limit for employers is $2,650 per year. However, a spouse can also receive a separate $2,650 for their own employer-provided contract.
Will I Also Be Able To Buy These Plans Next Year?
Each State Exchange is unique, with multiple carrier and plan choices, although there are typically available options that qualify as HDHP contracts. While states like Ohio, Wisconsin, and Virginia have many companies offering products, smaller states may have limited options. For example, states with only one available carrier are Alabama, Alaska, Oklahoma, and Wyoming, while nine other states only feature two carriers. So naturally, the selections in those states are limited.
California, for example, ("Covered California" is the name of the State Marketplace) previously, had no plans to offer HSA-compatible plans. Although this decision was very unpopular with many consumers that prefer to manage their own healthcare choices, there are now several choices. Several popular options are Oscar 60 HDHP Select EPO, Kaiser Bronze 60 HDHP HMO, Health Net Bronze 60 HDHP EnhancedCare PPO, and Blue California Bronze 60 HDHP PPO.
Open Enrollment takes place every year and we'll help you find the the best choice. Of course, if your state does not have a specific option that makes the most financial sense, we'll research and find the best alternative. It is expected, however, that more options may become available in many states in 2022. It's also possible that an additional Metal plan will be created (Copper?) that is cheaper than a Bronze plan.
Available HSA Plans In Marketplace
Listed below are popular HSA Exchange options that can be privately purchased. Only selected states are listed.
Alabama -- BCBS Blue HSA Bronze, and Bright Health Bronze 7000 HSA.
Arizona -- Oscar Saver Silver, BCBS Blue Portfolio HSA Bronze, Bright Bronze 7000 HSA, AMbetter Balanced Care 25 HSA, and Ambetter Essential Care 2 HSA.
Florida -- Oscar Saver Bronze, Ambetter Essential Care 2 HSA, HealthFirst AdventHealth Bronze HMO 100 HSA 1795, Florida Health Care Plans Gym Access IND Bronze HMO HSA 5000/6550, HealthFirst AdventHealth Gym Access Bronze HMO 70 HSA 1663, HealthFirst AdventHealth Gym Access Bronze HMO 100 HSA 1660, Florida Health Care Plans Gym Access IND Bronze HMO HSA 6000/6000, and Florida Blue BlueCare Bronze HSA 1765.
Georgia -- Alliant SoloCare Bronze HDHP, Ambetter Essential Care 2 HSA, BCBSHP Bronze Pathway X Guided Access HMO 0 for HSA, BCBHSP Silver Pathway X Guided Access HMO 10 for HSA, KP GA Bronze 6200/40%/HSA, KP GA Signature Bronze 6200/40%/HSA, KP GA Signature Silver 3200/20%/HSA, and KP GA Silver 3200/20%/HSA.
Indiana -- CareSource Marketplace HSA Eligible Bronze and Ambetter Essential Care 2 HSA.
Iowa -- Medica With CHI Health Bronze HSA, Medica Inspire Bronze HSA, and Medica Insure Bronze HSA.
Kansas -- Medica Connect Bronze HSA, Medica Connect Bronze HSA Plus, BCBS of Kansas BlueCare Simple Bronze HDHP, and BCBS of Kansas BlueCare Simple Silver HDHP.
Missouri -- SSM Health WellFirst Bronze HSA-E 6700X, Ambetter Essential Care 4 HSA, SSM Health WellFirst Bronze HSA-E 4000X, Anthem BCBS Bronze Pathway 0 for HSA, Anthem BCBS Bronze Pathway X 20 for HSA, Anthem BCBS Silver Pathway X 2950 for HSA, Medica Select Bronze HSA, and Medica Select Bronze HSA Plus.
New Jersey -- AmeriHealth IHC Silver EPO HSA $25/$50, AmeriHealth IHC Bronze EPO HSA Advantage $25/$50, AmeriHealth IHC Silver EPO HSA Hospital Advantage $50/$75, AmeriHealth IHC Bronze EPO HSA Hospital Advantage $50/$75, Horizon OMNIA Silver HSA, and Oscar Saver Silver.
North Carolina -- BCBS of NC Blue Value Bronze 6900, BCBS of NC Blue Advantage Bronze 6900, and Bright Health Bronze HSA 1.
Ohio -- CareSource Marketplace HSA Eligible Bronze, Medical Mutual Market HMO 6900 HSA, Medical Mutual Market HMO 5250 HSA, Medical Mutual Market HMO 4000 HSA, Oscar Saver Bronze, Oscar Saver Silver, Ambetter Essential Care 2 HSA, Anthem Bronze Pathway X HMO 6500/0% for HSA, Anthem Bronze Pathway X HMO 6000/0% for HSA, Anthem Bronze Pathway X HMO 0% for HSA, SummaCare Bronze 6750 HSA, and Paramount Bronze 1 HSA.
Oregon -- Kaiser KP OR Bronze 6900/0% HSA, BridgeSpan Bronze HDHP 6000 EPO OHSU Plus, BridgeSpan Silver HDHP 3500 EPO OHSU Plus, Moda Health Beacon Bronze HSA 6000, PacificSource Navigator Bronze HSA 6750, and Providence Health Plan HSA Qualified 6750 Bronze.
Pennsylvania -- Highmark Together Blue EPO Silver 3950 HSA, Highmark my Direct Blue HMO Silver 3950 HSA, Highmark my Direct Blue EPO Silver 3950 HSA, Highmark my Blue Access EPO Silver 3950 HSA, Ambetter Essential Care 2 HSA, and Oscar Saver Bronze.
South Carolina -- BCBS BlueEssentials HD Bronze 5, BCBS BlueEssentials HD Bronze 2, BCBS BlueEssentials HD Bronze 3, BCBS BlueEssentials HD Gold 3, BCBS BlueEssentials HD Silver 13, BCBS BlueEssentials HD Silver 5, and BCBS BlueEssentials HD Silver 6.
Texas -- Community Health Choice HMO Bronze 008, Oscar Saver Bronze, Oscar Saver Silver, Sendero IdealCare HSA, SHA Bronze 100% HSA, SHA Silver 100% HSA, Ambetter Essential Care 4 HSA, CHRISTUS TX Bronze HSA, FirstCare Health Plans IND Bronze HSA HMO 6750, IdealCare SelectCare Bronze High Deductible, SelectCare Expanded Bronze HSA, and IdealCare Bronze High Deductible.
Utah -- SelectHealth HealthSave Expanded Bronze 6850, SelectHealth Med HealthSave Expanded Bronze 6850, SelectHealth Value HealthSave Expanded Bronze 4000, SelectHealth Med HealthSave Expanded Bronze 4000, SelectHealth Value HealthSave Silver 3250, SelectHealth Med HealthSave Silver 3250, University Of Utah Health Plans Healthy Preferred Bronze HSA, University Of Utah Health Plans Healthy Premier Bronze HSA, University Of Utah Health Plans Healthy Preferred Expanded Bronze HSA, University Of Utah Health Plans Healthy Premier Expanded Bronze HSA, BridgeSpan Bronze HDHP 6000 EPO, and BridgeSpan Silver HDHP 3500 EPO.
Virginia -- Anthem HealthKeepers Bronze X 4900 for HSA, Kaiser KP VA Silver 3200/20%/HSA/Dental, CareFirst BluePreferred PPO HSA Silver 3000, OptimaFit Bronze 6000 20% HSA Direct M, Oscar Saver Bronze, and Piedmont Bronze 5000 HSA.
Wisconsin -- Common Ground Healthcare Co-Op Envision Aurora Bellin -- HSA Silver 3500/70, Common Ground Healthcare Co-Op Envision Aurora Bellin -- HSA Silver 3500/75, Dean Silver HSA-E 3500X, Dean Focus Network Bronze HSA-E 6650X, Dean Bronze HSA-E 6550X, Dean Focus Network Silver HSA-E 3500X, Group Health Co-Op Gold 2000 Ded/2000 MOOP HSA, Group Health Co-Op Bronze Simple Choice Plan HSA, Group Health Co-Op Select Bronze Simple Choice Plan HSA, Group Health Co-Op Bronze 6550 Ded/6550 MOOP HSA, Group Health Co-Op Select Bronze 6550 Ded/6550 MOOP HSA, Group Health Co-Op Select Gold 2000 Ded/2000 MOOP HSA, HealthPartners Atlas Individual $6600 HSA Bronze, HealthPartners Atlas Individual $3000 HSA Silver, Medica Bronze HSA Plus, Medica Bronze HSA, Unity Health Plan Pioneer One Bronze HSA $5,000, Unity Health Plan Gunderson Health System Silver HSA $3,000, Unity Health Plan Prime Bronze Standard HSA $6,000, Unity Health Plan Pioneer One Silver HSA $3000, Unity Health Plan Elite Gold HSA $1800, Unity Health Plan Beloit One Bronze HSA $1,000, Unity Health Plan Elite Silver HSA $3000, Unity Health Plan ProHealth Silver HSA $5050, Unity Health Plan Beloit One Silver HSA $3000, Pioneer One Gold HSA 1800, Unity Health Plan Elite Bronze Standard HSA $6000, Unity Health Plan Gunderson Bronze HSA $5000, and Unity Health Plan ProHealth Bronze HSA $5000.
Is It Right For You?
For many persons, the idea of having to face paying thousands of dollars in medical bills out of their own pocket may seem like a risky endeavor. However, if automatic contributions are made to the Health Savings Account through an employer’s payroll service, it becomes much easier to accumulate funds more rapidly. And you can accomplish the same type of saving when funding your own "side account." Electronic monthly withdraws simplify the process, with flexible deposit and investment options offered.
Perhaps, you will get to the point where you have maximized the amount of money that can be deposited. That would signify that your household is very healthy and has used very little of the available funds. In those types of situations, you may want to temporarily discontinue your extra deposits and perhaps place the money in a Roth IRA or increase your 401K funding. You can also purchase long-term healthcare coverage that counts as "qualified" spending.
The HDHP with a health savings account generally benefits healthy people more than those who continually experience high medical costs each year. The money saved on insurance premiums and deposited into your account transfers to you if it is not used for medical purposes. For those who routinely have significant medical costs or a catastrophic medical loss throughout the year, the savings may be harder to realize. Obviously, if this occurs every year, a more comprehensive copay plan is a better solution for your situation.
It is important to make a detailed comparison between a traditional health care plan and a high deductible policy. While there may be a net savings by moving to the HDHP-HSA combination, there may also be some trade-offs such as higher co-pays, or co-insurance requirements that wind up costing more. We show you the best available HSA plans for individuals so you can save the most money. Upon request, we also review your employer-sponsored options, and review which provided plans are the most cost-effective.