Q&A - What to Ask about Your New Health Plan
Questions & Answers
How do individual/family health insurance plans work?
You are responsible for all medical charges up to your deductible amount (see First Dollar Coverage below for exceptions). Once your deductible is satisfied, there may be 100% coverage or coinsurance - depending upon plan selection - until you reach your maximum out of pocket. Once you meet your maximum out of pocket, you are covered at 100%. Note: you will always receive the pre-negotiated price (discount) on all services and prescription drugs just by having health insurance.
How do I get a health plan and how long does it take?
You must select a plan you would like to apply for, let us know your choice so we can send you the application paperwork, and then complete the application. All plans are fully underwritten, which means that each company has the right to deny you based on your health history and height/weight ratio. Underwriting can take as little as a few days to as long as 6-7 weeks with the average being 3-4 weeks.
What is a HSA?
HSA stands for Health Savings Account and must be paired up with a Qualified High Deductible Health Plan (QHDHP).
Where do I set up my HSA?
Often times, the insurance company you purchase your QHDHP through will offer an account administrator to you, but you can set up your HSA with an administrator of your choice such as your local bank or an online administrator.
MPORTANT:
Do not set up your HSA until your QHDHP is approved and effective.
What are the tax benefits of traditional and HSA plans?
Traditional Plans: If Self-Employed: The monthly premium is 100% tax deductible at the end of the year and out of pocket expense (i.e. deductible and/or coinsurance) is ONLY tax deductible if it is over 7.5% of your adjusted gross income and then only the amount over this percentage is tax deductible.
If Employed: your monthly premiums and your out of pocket expenses are added together and then anything over 7.5% of your adjusted gross income is tax deductible.
HSA Plans:
If Self-Employed: The monthly premium is 100% tax deductible at the end of the year and you have the option to set up a health savings account in which your contributions are 100% tax deductible and the money can be withdrawn to pay for qualified medical expenses � thus making your out of pocket expenses tax deductible. If Employed: if your monthly premiums are over 7.5% of your adjusted gross income, the amount over is tax deductible, and you have the option to set up a health savings account in which your contributions are 100% tax deductible and the money can be withdrawn to pay for qualified medical expenses - thus making your out of pocket expenses tax deductible.
How much can I contribute to my HSA?
It is your choice if you want to make contributions and you determine the amount of your contribution up to the annual maximum allowed. The 2008 maximum for self-only coverage is $2,900 or $5,800 for family coverage, regardless of the deductible under the high deductible health plan (QHDHP). There is a catch-up provision for those over 55 years of age which allows you to contribute an additional $900 a year.
Contributions are tax-deductible and earn interest.
How is the deductible different between the traditional and HSA plans?
Traditional Plans: Per person deductible per year (capped at 3 people)
HSA Plans: Family deductible per year
What can my HSA funds be used for?
You can choose to withdraw your HSA funds to pay for qualified medical expenses defined under Section 213(d) of the IRS Code.
Examples include:
doctor/hospital visits, prescriptions, medical equipment, along with expenses that your health plan does not cover like over the counter drugs, vision and dental services including glasses, contacts, lasik surgery, braces and much more.
For a complete list of qualified medical
expenses, visit www.irs.gov/pub/irs-pdf/p502.pdf
(the list begins on page 5).
What is coinsurance and how is it different between traditional and HSA plans?
Coinsurance is the cost sharing between you and the insurance company that occurs once your deductible is satisfied. Typically known as 80/20 (you pay 20%) but there are other options.
Traditional Plans: 80/20 split (50/50 with Assurant Health) after deductible is satisfied until you reach the maximum out of pocket, after which, you are covered at 100%; Exception: some deductibles have 100% coverage after deductible.
HSA Plans: Your choice of an 80/20 split after deductible until you reach the maximum out of pocket, after which, you are covered at 100% OR covered at 100% after deductible is satisfied; Assurant Health offers a 50/50 split option also.
Do any of the plans have first dollar coverage?
Traditional Plans: The only services that are covered prior to the deductible being met are prenatal care, well-child visits up to the age of 6, and immunizations up to the age of 18; all of which are covered at 100% per Minnesota law. Exceptions: BlueCross Simply Blue Plans, HealthPartners Three for Free Plans, Medica Solo Plans, and Medica Encore Plans offer a variety of first dollar coverage.
HSA Plans: Same as above and you also have the option to have First Dollar Preventive Coverage with BlueCross, HealthPartners, and Medica, which gives each person on the plan $200-300 (depending on plan selection) per year in preventive care (i.e. physicals, pap smears,
cancer screenings, etc.) that is paid prior to the deductible being met.
What happens to my HSA funds if I do not use them?
The funds accumulate and will always remain in your account. You can withdraw money for non-qualified medical expenses with tax
consequences - pay income tax and a 10% federal penalty. HSA accounts have similar features as Individual Retirement Accounts, IRA's, in that money can be withdrawn after the age of 65 without the 10% penalty; however, you will still have to pay income tax on it if withdrawn for a non-qualified medical expense.
How will I keep track of my HSA funds? You will be sent quarterly and annual statements.
What if I have a HSA and decide to change health plans and my new one is not a qualified high deductible health plan? HSA's are permanent and portable. You take your HSA with you. If you no longer have a qualified high deductible health plan, you cannot make
contributions, but can continue to use the funds for qualified medical expenses or can leave it in the account for retirement income.
What are the benefits of having a HSA Plan?
You get more than complete major medical coverage - you get premium savings and tax advantages that translate into extra money in your pocket. Invest those extra funds in your HSA, and they are tax-deductible. Let your funds gain interest, and it's tax-deferred. Withdraw the funds to pay for qualified expenses, and they are tax-free. Leave your funds in your HSA and it works like an IRA.
Contact InsuranceSmart (1-800-645-6920) for more information!
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