Reduce Your Deductible
to $100 for Accidents
April 14, 2006
Vol. 2, Issue 4
Almost everyone can see the logic of carrying a high-deductible health insurance plan to protect against the major unexpected expenses. Yet a high deductible can make some people a little nervous. Even a short trip to the emergency room to get stitches can cost several hundred dollars. If you break your leg skiing, the cost could quickly run into thousands of dollars. Fortunately for people with these concerns, inexpensive accident plans are available which can reduce your deductible to just $100.
Unexpected Medical Expenses
Though any type of medical expense can sneak up on you, most chronic illnesses provide clues long before they get serious. If you're overweight, if you have digestive issues, or if you have a difficult time climbing a flight of stairs, you're aware that you have health concerns long before your doctor or insurance company knows. But nothing sneaks up on you faster than an accident.
I now live in Colorado, and am fortunate to be able to take advantage of some of the many great outdoor activities available out here. Last weekend we took my 3-year old son skiing for the first time. (Well, he wore the skis and I pushed him around on them some. I'm not sure you'd really call it skiing...)
Wiley IV, on skis for the first time
But the first time I ever tried snowboarding was in 1999, when I was still living in warm and sunny Atlanta, Georgia. I only had three days on the slopes, so I figured if I was going to get this snowboarding thing down, I'd have to go all out. The first day I must have fallen 200 times, and by the end of the day I felt like I'd been in a boxing ring with Mike Tyson all day.
Day two was a little better, and I was beginning to get the hang of it. And by day three, I was cruising down the mountain like I'd been doing it for years. Or so I thought.
One of the key skills in snowboarding is to keep the board tilted somewhat onto its uphill edge. If the downhill edge of the board catches, you go tumbling. And that's exactly what happened as I was confidently cruising down a fast straightaway. I must have flipped over 5 times, and tumbled 50 feet. When I finally stopped I realized I could barely lift my arm.
Gotta Meet that Deductible
I wish I could tell you I had an accident policy at the time, but I didn't. But I did have a high-deductible health insurance plan. After a few days my shoulder started feeling a little better. I didn't feel like paying several hundred or thousand dollars for x-rays and physical therapy, so I didn't bother getting it looked at, figuring it would heal on its own.
Well it did heal, kind of. But I did not have full mobility, and eventually went to the doctor. The doctor said he could do surgery, but with no guarantees, and that physical therapy early on would have really helped. If my only exposure had been $100 at the time, you can bet I would have gotten it looked at right when the accident happened.
How Accident Plans Work
Now I carry an accident policy. An accident plan won't pay a penny if you get sick, but if you have an accident and go to the doctor, emergency medical clinic, hospital emergency room, or even if you're admitted to the hospital, they'll cover 100% up to the set limit after a $100 deductible.
Some insurance companies offer these as options with their plans, or you can purchase an accident plan separately. We currently offer three stand-alone accident plans that pay up to $2,000, $5,000, or $10,000. And they are very reasonably priced, ranging from $12/month for the $2,000 plan for an individual, to $34.95 for a $10,000 plan for a family. (See our Accident Insurance page for complete details.)
How Accident Plans can Work with Your HSA
Having an accident plan can be a great way to buffer the risk that comes with a high-deductible health insurance plan. Let's say you have a $5,000 deductible on your HSA plan, and it then pays 100%. In that case, you may want to consider adding a $5,000 accident plan to your coverage. If you were to have an accident that led to an emergency room bill of $800, you would only be responsible for $100.
If you were to have a very major accident that required hospitalization, your accident plan would pay $5,000 after you paid the first $100. This would cover your deductible on your HSA plan, which would then pay 100%. Your exposure would only be $100.
Another money-saving strategy you may want to consider is raising the deductible on your HSA (which will lower your premium), and adding an accident plan. I myself currently carry an $8,000 deductible HSA plan, along with a supplemental accident plan.
By the way, we have now added a "How to" Guide page to our website, where we explain step-by-step how to choose an HSA qualified plan and how to apply. If you are considering an HSA or switching to a different insurance plan, you may want to check it out.
P.S. - Every month my goal is to provide practical information that can help you make more intelligent financial decisions and maximize the benefit you get from your HSA. We do this to help our clients and subscribers, and to build our business. If you find this information useful, please forward it to others who might be interested.
P.S.S. - Next month I'll discuss what to look for when choosing an HSA administrator or trustee. If anyone has any stories or feedback, good or bad, that they would like to relate about an HSA administrator, please email me.