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There is no one "best" plan in general, but there are plans that are best for you
and your family's health needs. Plans differ, both in how much you have to pay and
how easy it is to get the services you need.
Health Savings Account
U.S. Congress has passed a law, effective January 1, 2004, which provides broad
access to Health Savings Accounts - HSA, which allows consumers to pay for qualified
medical expenses with pre-tax dollars (income-tax free!) and save for retirement
on a tax-deferred basis.
A HSA is a tax-favored saving account that is used in conjunction with a high-deductible
HSA-eligible health insurance plan to make healthcare more affordable and to save
for retirement. HASs are similar to an IRA but with some additional advantages.
Pre-tax money is deposited each year into an HSA and can be easily withdrawn at
any time with no penalty or taxes to pay for qualified medical expenses. Withdrawals
can also be made for non-medical purposes, but will be taxed as normal income and
are subject to a 10 percent penalty if done prior to age 65.
Any HSA funds not used each year remain in the account, and earn interest tax-free
to supplement medical expenses in the future.
Like an IRA, the account belongs to you, not your employer. But unlike an IRA, your
employer may contribute to your HSA.
In order to have a Health Savings Account, you must have a HSA-Eigible Health Insurance
Plan. This type of insurance plan is often referred to as a High Deductible Health
Plan, and is typically less expensive than plans with lower deductibles.
A health insurance plan must meet the following criteria to be considered HSA-eligible:
The health insurance plan must have an annual deductible of at least $1,050 for
individuals and at least $2,100 for families.
The sum of the annual deductible and the other annual out-of-pocket expenses required
to be paid under the plan (other than premiums) does not exceed $5,000 for individuals
and $10,000 for families
A Health Savings Account (HSA) is a special tax-advantaged savings account similar
to a traditional Individual Retirement Account (IRA) but designated for medical
expenses. An HSA allows you to pay for current covered health care expenses and
save for future qualified medical and retiree health care expenses on a tax-favored
basis. HSAs provide triple-tax advantages: contributions, investment earnings, and
qualified distributions all are exempt from federal income tax, FICA (Social Security
and Medicare) tax and state income taxes (for most states).
Unused HSA dollars roll over from year to year, making HSAs a convenient and easy
way to save and invest for future medical expenses. You own your HSA at all times
and can take it with you when you change medical plans, change jobs or retire. This
means the funds in the are non-forfeitable and portable.
Funds in the account not needed for near term expenses may be invested, providing
the opportunity for funds to grow. Investment options include bank accounts, mutual
funds, etc.
Preferred Provider Organization
Preferred Provider Organization (PPO) is a form of managed care, which has arrangements
with doctors, hospitals, and other providers of care who have agreed to accept lower
fees from the insurer for their services. In addition to the PPO doctors, plan members
can refer themselves to other doctors, including ones outside the plan, but you
will receive reduced benefits.Usually there is no need in doing that, because the
cost to use physicians within the PPO network tends to be less than using a non-network
provider.
Health Maintenance Organization
Health Maintenance Organization (HMO) are the oldest form of managed care plan.
HMOs will give you a list of doctors from which to choose a primary care doctor.
If you go outside the HMO, you will pay for the visit. Primary care doctor coordinates
your care, which means that generally you must contact him or her to be referred
to a specialist. With some HMOs, you will pay nothing when you visit doctors. With
other HMOs there may be a copayment, like $20, for various services.
Plan works very simple. You pay a set premium and in return HMOs offer you a range
of health benefits, including preventive care.
Point-of-Service Plan
Point-of-Service plan (POS) is a type of managed care plan combining features of
health maintenance organizations (HMOs) and preferred provider organizations (PPOs).The
primary care doctors in a POS plan usually make referrals to other providers in
the plan, then plan pays all or most of the bill. Most members can refer themselves
outside the plan and pay a deductible and/or a coinsurance charge.
Indemnity Plan
With an indemnity plan you can choose any medical provider . After your visit they
send the bill to the insurance company. Usually, you have to pay a deductible (in
the insurance agreement specified amount) before the insurer starts paying. Most
indemnity plans pay a 80 percent of what they call the "Usual and Customary" charge
for covered services and you are left to pay coinsurance, which is the 20 percent
of carges. This plan reimburses only "covered" medical expenses, a list of which
can be found in your benefits summary which contains the vast majority of procedures.
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