What is a High Deductible Health Plan or HDHP? How does it work?
Premiums are the monthly payments you make to keep the health plan. Deductibles are the money you spend for your medical expenses before they are covered by your health plan. You pay for the medical expenses until you reach the deductible amount. Afterwards, the expenses are paid by your health plan. Co-pays can sometimes be part of the deductibles. The cop-pay is the amount you pay when you visit a doctor. Co-pay usually costs $15-20 per visit. For example, a doctor’s consultation costs $100. If your negotiated co-pay amount is $15, then you only pay this amount. The health plan pays the remaining $85. Federal law states that this health plan can have a minimum deductible of $1,100 per person and $2,200 per family per year. If you have HDHP, you can tax-defer up to $2,850 per person, and $5,650 per family per year in a HSA. These amounts are tax-free. You can thus save a lot in taxes if you have HSA. But the amount still depends on your tax bracket. You cannot use the money in the HSA, however, to pay the premium of the health plan. The money can only be used to pay the deductible and your co-pay. You can add more money to your savings in the HSA. Your money is retained even after the year ends. They also gain interest and remain tax-free as long as you use them to pay for you medical expenses or withdraw them when you reach 65 years old. HDHP, and its accompanying HSA, are used for emergencies or expensive medical expenses. Saving $500-1,000 in the HSA will allow you to regularly increase your savings, through the health plan, and protect you from paying high medical bills. Answer by admin — May 23, 2009 @ 11:32 am No CommentsNo comments yet. Leave a comment |
|
A High Deductible Health Plan or HDHP can often be used together with a Health Savings Account (HSA). It usually has lower monthly premiums than regular health insurance plans, and has a high deductible amount.
