As medical costs rise, so do health insurance premiums. To decrease how much of your money you spend on premiums, you may want to switch to a plan with a high deductible because these policies tend to cost less than full-coverage plans. Generally speaking, higher plan deductibles correlate with lower premiums. Now that recommended health care is covered independent of a deductible, that’s less of a risk. But, what happens when you have to buy health care until the plan’s coverage begins?
There is a type of health insurance that makes it easier to save by offering tax deductions for what you save. These plans also allow you to start a savings account in which earnings are not taxed. These policies are qualified to let you save with a special tax-advantaged account called a Health Savings Account.
Are you familiar with Health Savings Accounts? You can withdraw HSA funds to spend on qualified medical expenses like dental care, acupuncture, etc., for you and your family without ever paying taxes on the withdrawals. Eventually, you can spend HSA money on health care and Medicare premiums when you retire. For you to enjoy these tax advantages, though, you need a qualified HSA health insurance plan.
As of 2012, HSA-qualified plans have a deductible starting at $1,200 for individual coverage or $2,400 for family coverage. The deductible alone, though, is not enough to make a plan HSA qualified. You’ll have to check the policy to be sure. Since contributions can be deducted from your adjusted gross income, the IRS limits the amount that you can deposit in an HSA. The annual limit for 2012 is $3,050 for individual plans. Family coverage must have a deductible of at least $6,150. These numbers are increasing in 2013. HSA maximum contribution limits will increase by $150 for individual plans and by $200 family plans.
Having an HSA plan doesn’t make you immune to rate hikes, but premium increases have historically been less for these plans than for all types of health insurance plans combined. If you really want to get ahead of rate hikes, I suggest you compare plans every year.