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What is a Health Savings Account?
The HSA program has two parts: a high-deductible health plan (which usually costs less than other health plans) and a tax-advantaged, portable savings account for payment of current medical expenses which builds like a “Medical IRA”.
To participate in an HSA, you must be enrolled in a high-deductible health plan (HDHP). HDHPs typically have the lowest premiums of all health plans. If you’re currently enrolled in an HMO or a PPO and you switch to an HDHP, you could save one-third to one-half of your cost for coverage, right off the bat. (Some HMOs are offering HSA eligible plans.)
How are Health Insurance Plans and Medical Discount Plans different?
Finding and purchasing reliable health insurance when you are self-employed, between jobs, leaving your parent’s coverage, or employed at a job where health insurance is not offered, can be a challenging task. To start with, it is important to know the difference between Health Insurance and Health Discount Plans.
Indemnity, HMO, PPO
Health insurance, usually instituted with a specific set of rules dependant upon the individual policy, will have a deductible (An amount you pay out of pocket before the insurance starts to pay, usually per calendar year), the size of which is dependant on the plan chosen. You will also have to decide whether to choose a plan that allows you to choose which doctor to visit, often called an Indemnity Plan, or whether you may only visit doctors that are within your specific plan, often referred to as an HMO (Health Maintenance Organizations) or a PPO (Preferred Provider Organization). While details will vary from plan to plan, most HMO’s and PPO’s have set guidelines for doctors that, they have pre-approved for its policy holders to use. If a doctor is outside of this network, your chances of getting them to pay for your visits are very low. Each plan, whether an Indemnity, HMO, or PPO, has its own advantages and disadvantages. Research the fine details of any plan you are considering is vital, so that if you need to put the policy to use, you have some idea of how it works
Medical Discount Plans
Medical discount plans need to be clearly defined as not being health insurance. For a monthly fee, often lower than what an insurance plan can be offered for, you will receive certain discounts, such as lower prescription costs, percentage off of office or hospital visits, dental care, and eye care. While these discount plans are not for everybody, they do have advantages, such as for the uninsured who cannot afford insurance at all.
Why do different people pay different levels of premium?
The amount you pay depends on the level of risk you transfer to the insurance company. The price you pay for life and health insurance mainly depends on your age, health, lifestyle and occupation. So if you are older, have health problems or smoke, and happen to work in a dangerous environment, you will have to pay more for life and health insurance than someone who is younger, healthier, a non-smoker in a low risk occupation.
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