High Deductible Health Insurance Plans
Whether you're still evaluating your options for medical coverage, or you're already covered by a conventional health care plan through an HMO or PPO, you should be aware of a fairly new option for health insurance called a High Deductible Health Plan (HDHP).
Launched in 2003, as an alternative to the plans offered by HMOs and PPOs that promise low deductibles but charge high premiums, a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) provides traditional medical coverage and a tax free way in which to save for future medical expenses. You can pay your deductible with funds from your HSA or HRA. If you have an HSA, you can also choose to pay your deductible out-of-pocket, allowing your savings account to grow.
If you are enrolled in Medicare, you are not eligible for an HSA. The HDHP with HSA or HRA gives you greater flexibility in how you use your health care benefits.
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High Deductible Health Plans Benefits
As with all health care plans, there are benefits and potential drawbacks to having an HDHP. Some of the advantages include:
- Once you sign up for an HDHP, you may be eligible for a Health Savings Account in which the money you deposit, accrue on interest, and withdraw for health-related expenses is tax-free
- Tax-free withdrawals from the supplementary Health Savings Account may be used to pay for out-of-network providers at any time, without prior approval from your insurance carrier
- Unlike a traditional Medical Savings Account (MSA), the balance in your HSA is portable
- After you turn 64, the balance of your HSA may be withdrawn tax-free, for any reason
Is a Health Plan with High Deductibles Right for Me?
An HDHP with an HRA or HSA may be an attractive option if you are looking for a tax-free way to save money for future medical expenses, or if you wish for greater flexibility with the way you use your medical benefits. By signing up for an HPHD, you can expect to pay less money per month, while retaining control over which doctors you see and accumulating the benefits you don't use in an HSA.
Request a health insurance quote and speak with a licensed agent who can provide you with information, answer your health insurance related questions and help you determine which kind of health coverage is best for you.
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