According to America’s Health Insurance Plans (AHIP), the number of people participating in high-deductible health plans (HDHPs) has been skyrocketing. Approximately 13.5 million people are enrolled in a high-deductible plan in 2012. That’s an 18 percent increase from the number of policyholders in 2011. Based on a recent survey by Towers Watson, about 70 percent of large-company employers said they would offer HDHPs in 2013.
It’s no wonder that companies offer high-deductible policies paired with a Health Savings Account (HSA). With the increasing cost of health care, employers are trying their best to decrease health care expenses. You see, with a high-deductible plan, premiums are often lower than health insurance plans that cover more low-cost health care. Well, that explains what employers like about these policies, but what about employees?
Since employers pass the cost of premiums back to employees, either directly or by not increasing wages to keep up with inflation, employees may benefit, too. There are a few things you should think about when you are looking into starting a Health Savings Account, though.
First, you need to make sure that an HSA will fit your situation. High-deductible plans are best suited for people whose health is pretty good. If you frequently need to visit the doctor for a chronic health problem, getting a high-deductible plan means you’ll be paying for those appointments. This is because you need to meet the annual deductible before your insurance covers those bills. Add up the cost and see whether it’s going to manageable. The low premiums may not be enough to compensate you.
If having an HSA works for you, it can double as a retirement fund. Whatever you don’t need for health care, you can let grow with tax-deductible deposits and tax-free earnings. An HSA does not have the “use it or lose it” feature you’ll find in flexible savings accounts. HSA balances roll over every year. Once you do retire and enroll in Medicare, you can keep on using your HSA money for health care, even Medicare or long-term care premiums, or you can leave your HSA funds in an investment. Depending on where you set up your HSA, you may be able to invest in bonds.