Health insurance premiums are going up as a result of the Affordable Care Act, in some cases quite dramatically. People on the lower end of the income scale though, will get subsidized premiums that could prove to be less than what they are paying now.
Starting in October, your HSA for America advisor can help you see if you qualify for a tax subsidy and get you signed up for it. It will be immediately applied against your premium, so you only pay the net cost. But, what are you going to do if you don’t qualify for a subsidy to lower the price of health insurance? That’s my problem, so I’m exploring a lot of options to get health care without paying more for it every year. Here’s what I’m doing to spend less on health insurance and still get health care.
1) I’m Keeping Pre-reform Coverage for as Long as Possible
I expect higher rate increases will be applied to policies that meet new regulations. So if you have a grandfathered plan (one that went in effect before Obama signed the bill into law in October 2010), you may want to keep it. If you sign up for a plan in 2013, you won’t have to change to one of the new metal plans until your one-year anniversary. And of course if one of the metal plans does look better, you can always switch to one of those plans.
On the other hand, you may want to consider changing to one of the new plans if you expect to qualify for a subsidized premium, or if your currently policy excludes coverage on certain pre-existing conditions.
2) Get Tax Breaks Even if You Don’t Qualify for a Subsidy
The new tax subsidies are not the only way to save on health care. I’ve had a policy that let me have a health savings account (HSA) for years. Just about everything I spend on health care, including going to the dentist, can be deducted from my taxable income when I file federal and state taxes. I just deposit money in my HSA and withdraw it to pay a medical bill.
Having an HSA even helps if you prefer not to work with a traditional doctor. You can use HSA money to pay for a full blood/urine panel, for example, based on orders from a naturopathic doctor if a traditional doctor won’t order the test. That test may be more comprehensive than what a traditional doctor would do for an annual physical.
If a naturopath recommends nutritional supplements to prevent or treat a specific medical condition, you can buy those supplements with HSA money. You typically can’t use HSA money for regular daily vitamins, though, so keep the naturopath’s written recommendation.
3) Lower Rate Increases Are Associated with Health Savings Accounts
My HSA-qualified policy didn’t have rate increases as high as some other policies, so I saved some that way. I even managed to save extra to contribute to my HSA because those earnings aren’t taxed while in the account or when I buy health care. An HSA is like an IRA in that way.
With an IRA, I can’t take money out without paying a penalty until I’m 59 ½. I can withdraw from my HSA before age 59 and pay for my own health care or my family’s health care with no penalty.
If you own a business, you may also be qualified to start a health reimbursement arrangement. An HRA can work in combination with an HSA, and get you even greater tax savings that way. You can find out more at www.HSAforAmerica.com/HRA.htm.
Coverage Will Not Be Denied for Pre-existing Health Problems
If you have pre-existing health problems that insurance companies would frown on, that’s no problem as of October 1. Children can currently get coverage if they have a chronic problem like asthma. Adults will have the same opportunity in just four more months. If you apply this fall, your policy will take effect January 1.
If you’ve been afraid to apply because you think you’d be turned down, or you’ve already been refused coverage, contact HSA for America by October 1. Your coverage will be guaranteed then.
If you’re eligible for a tax subsidy, premiums can’t exceed a certain percentage of your annual income. That’s on a sliding scale. For someone making around $14,000/year, annual premiums can’t exceed two percent of that. For someone making about $41,500, annual premiums can’t be more than 9.5 percent of their annual income.
If you need some assistance with your health insurance, we’ll help you analyze your choices and help you make your best decision.