HealthSavingsAccount-HSA.com

a comprehensive resource of information on health savings accounts

What do you think of HSAs?

Send your comments & questions

This Web site is sponsored by:  

MedSave.com

short term and low cost health insurance including HSA-qualified plans

 Ehealthdiscountplan.com

access to PHCS network discount prices to supplement your HSA

allowable supplemental insurance for HSA plans

Alternatives to Health Savings Accounts

Many people do not qualify for the new Health Savings Account plans that became effective January 1, 2004.  The new type of health plans are supposed to save money by cutting health insurance costs and adding a tax-deductible savings account to cover most out-of-pocket health costs for those few who qualify.  But even the most optimistic forecasts predict that less than one percent of Americans will use HSAs by the end of the decade.  The vast majority of us need to find alternate ways to control health care costs.

This article does not cover the many reasons most people cannot use a health savings account since that topic has been covered at length in other articles reprinted at www.tonynovak.com.   This article focuses on alternatives that may be available to replicate the tax and insurance savings of a health savings account. 

Other Employer Sponsored Health Plans

A health plan called a “Health Reimbursement Arrangement” is an attractive option when an employer wants to cover out-of-pocket health expenses for employees.  Unused benefits can accumulate year after year similar to a health savings account but ultimately the unused benefits revert to the employer.  A similar design that allows employees to use their own salary to pay for health benefits on a pre-tax basis is called a “Flexible Spending Account” or “FSA”.  The Flexible Spending Account plan has a “use it or lose it” feature that limits the benefits to the current year.   Both of these are employer-sponsored plans so an employee cannot enroll in one of these plans without the employer’s sponsorship.  These plans cost about $50 per month for a typical small business, but often save thousands of dollars in wage taxes and health insurance premiums.  More detail on both of these plans can be found at www.FreedomBenefits.org.  A chart comparing all three types of plans is available from the “Resources” page at www.healthsavingsaccount-hsa.com .  Neither of these employer-sponsored plans can be used by self-employed people.

Self-employed Pension Plan

For self-employed people, it is easy to incorporate coverage for post-retirement out-of-pocket medical costs into a comprehensive retirement plan.  The liberal designs allowed in pension plans make these natural vehicle to fund post-retirement health benefits.  Unfortunately, there is no easy way for a self-employed person to have their business cover current out-of-pocket health expenses on a pre-tax basis. See the pension plan page at www.FreedomBenefits.org for details.

PPO Discount Plan

Almost anyone who pays cash for health care expenses can save money by using a PPO discount plan that covers medical visits, prescriptions, dental care, vision and other related expenses.  A PPO plan member typically pays about 25% less than a cash-paying patient for the same services. 

Unfortunately a number of disreputable PPO plans have entered the market and are currently being promoted on the Internet.  A good plan should cost less than $20 per month (inclusive of medical, dental, prescription and vision) for a family plan and should offer you a free trial period to test the amount of the network discounts like the PPO discount plan from Fortis at www.ehealthdiscountplan.com.  An article that helps make the distinctions between PPO plans titled “Comparing Health Discount Plans” can be found at www.tonynovak.com/articles.htm.