Insurance World

When most people learn that their family’s health insurance coverage is going to cost more, they shop for a more affordable policy. Often the solution is a combination of an insurance plan and a tax-sheltered Health Savings Account.

More than 1 million Americans have made a similar choice, signing up for high-deductible health insurance policies and associated HSAs since the program was introduced in late 2003 according to the Washington-based industry group, America’s Health Insurance Plans.

The new plans are a bit complex, but a growing number of insurers offer them.

Under federal law, the policy must have a minimum deductible of $1000 a year for an individual and $2000 for a family; maximum out of pocket expenses; for example, copayments required for surgical procedures, cannot exceed $5100 for individuals and $10,200 for families.

People Help With Their Own Health Insurance

Policyholders, meanwhile, can set up HSAs that they fund with their own money. Employers also can contribute to their workers’ HSAs. HSA contributions, generally set an amount equal to the policy’s deductible, can best be used to cover health care costs, and unused money can be carried over at year’s end. This differs from company sponsored Flexible Spending Accounts, health care savings plans in which unused money is forfeited after Dec 31 of each year.

Some companies are replacing existing catastrophic health coverage plans with the new plans because they see HSAs as a good way for workers to handle the higher deductibles. Others see them as a way of making workers more mindful of health care spending.

Health Insurance For The Young And Uninsured

The new policies are especially attractive to young singles, people in relatively good health and higher income people who can afford to cover higher out of pocket costs.

The new policies also are attractive to small businesses and the uninsured. Of the new policies purchased through eHealthInsurance, more than 40% were purchased by people with annual incomes below $50,000, almost half were families and more than one-third had been uninsured.

Affordable Health Insurance

It’s the affordability. Participants get a lower cost premium and the money they probably would have been spending can be run through a savings account to buy day to day medical services.

More companies will adopt the plans because the trend is that more of the burden for health benefits is going to be moved to the employee.

On the other hand, people who can afford to fund the HSAs and don’t need to draw them down entirely to cover annual medical expenses will be able to let them grow tax-free. In retirement, the excess savings can be used to purchase long-term care insurance and to pay for other qualified medical expenses.

That means that they’re more popular for those approaching retirement age, especially if they don’t have company plans available to them.

There are many health insurance alternatives, so it’s important that people asses their individual needs.

Reading auto insurance policies can be like trying to decipher advanced calculus. It’s really not that difficult if you understand a few basic terms. Collision, Comprehensive, Bodily Injury Liability and Property Injury Liability are the main terms you need to fully understand.

You’ll appreciate Collision Coverage in the event you need repairs or replacements if your vehicle collides with another vehicle or property. The higher the deductible you elect, the lower your premiums will cost you. If you’re at fault for something, well of course it would still be an accident, as I doubt you’d plan to run into that guard rail, but how much would you be able to afford to pay out of pocket for repairs? $250? $500? $1,000? Just like medical insurance, you’d have to pay that deductible amount first and then the insurance company would pay for the remaining charges for the repair.

Another term to become intimately familiar with is Comprehensive Coverage. This is the coverage that pays for damage caused from falling objects, fire, certain natural disasters, theft and vandalism. Deductibles work the same way as with Collision; the more out of pocket costs to you, the less your insurance premium.

In addition to knowing how much Collision and Comprehensive coverage you have, you’ll want to know about your liability coverage. Let’s say you rear-end another driver. Or your foot slips off the brake onto the gas pedal and you plow down a mailbox. Your liability coverage will kick in and pay for the damages that you caused with your insured vehicle. You liability coverage will, or could, include bodily injury (people) and property damage.

You don’t want to go without Bodily Injury Coverage. If you were at fault in an accident and others involved needed to go to the hospital and/or lost wages from missing work, those costs would come out of your pocket if you are not insured with Bodily Injury Coverage. It doesn’t take a genius to know how quickly those amounts can add up. This type of coverage can also help you in the event the other party takes legal action against you. Many states require you to carry Bodily Injury Coverage.

The other part of liability includes Property Damage coverage. Can you imagine how much it might cost should you accidentally drive into the side of someone’s home? You wouldn’t want to be caught without property damage insurance should you need to pay for repairs to another vehicle, building or anything else you might hit. As with Bodily Injury coverage, Property Damage coverage also helps protect you in the event of a related lawsuit.

Every policy will have its limits and various degrees of coverage. It’s important that you understand the basics of what you are paying for and why it is necessary. No one plans for an accident, be prepared!