Let's face it. Low cost health insurance is hard to find. If your employer offers it, it's likely expensive. Even if he pays part of the premium for you, your part is still going to take a large chunk out of your paycheck. If your employer doesn't offer health insurance, or if you're self-employed or unemployed, you're going to be in an even direr financial predicament. So what do you do about obtaining coverage? You create your own low cost policy by setting up an HSA/HDHP plan.?
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But what IS an HSA/HDHP plan? We'll start with the HSA plan. An HSA is also known as a Health Savings Account. This type of account allows you to save money for future medical costs. These are tax deferred accounts and are part of an overall HDHP plan. You've got to have one to have the other.
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The HDHP plan is a high deductible low cost health insurance plan that covers serious illnesses and injuries, as well as preventive health care. HDHP plans can be either PPOs or HMOs, and you can choose from both in and out of network providers. Naturally, as in any health plan, in network providers are cheaper. There is an annual deductible for everything except preventive care, and the deductible is usually high, so that premium prices are able to be kept low.
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The Health Savings Account (sometimes referred to as a Health Reimbursement Arrangement) is attached to the HDHP plan. With the HSA, you can set aside a portion of your salary or wages each pay period to go into the account, up to a certain amount. Most plans allow you to contribute between $3,000 and $5,000 to the plan each year, with the money being added to the account up front at the beginning of the year and re-paid by you in regular, automatically deducted installments.
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While not a traditional health insurance plan, the HSA/HDHP combo can translate into a de facto low cost health insurance plan by default, and is an excellent choice for those with minimal health care expenses and overall good health. This type of plan allows you to take care of your regular prescription and co-pay costs and set aside money for unforeseen health expenses without breaking the bank. If you need health coverage now and can't afford a traditional policy, then the HSA/HDHP option may be right for you, so talk to your employer or insurance agent about setting one up.