Tax Qualified Health Insurance Can Save You Money & Boost
One of the most popular (and lowest priced) types of Tax Qualified
health insurance plans is the HSA qualified HDHP. HSA stands for
"Health Savings Account", more commonly referred to as a "Medical IRA".
HDHP stands for High Deductible Health Plan.
HSA qualified HDHP's are a unique way to attractively manage your
health insurance costs. For
a brief introduction to Consumer Driven Tax Qualified health
insurance please watch the following short but informative videos:
popular belief you can still purchase an HSA qualified HDHP in 2014
and beyond. The "Bronze" plan under the PPACA (Obamacare) is an HSA
qualified HDHP. In fact, there are many more benefits included with
HSA qualified HDHPs than there were before Obamacare. This is so
because all health insurance plans sold after January 1, 2014 must
now include 63 preventive care test and exams with no deductible or
co pay required. To view all of those test and exams click the
originally named MSAs or Medical
designed by Mr.
and promoted in
Congress by Representative Bill Archer (R) of Texas.
Terry's idea was to find a way
to reduce the cost of health insurance for the self employed without
sacrificing quality coverage for a major medical illness.
brilliant idea was to eliminate the parts of a
Insurance Plan that cost the consumer the most money.
These expensive benefits include outpatient doctor "co pays" and
outpatient prescription "co pays". Terry approached Congress with a
proposal that stated in essence that if you remove those two
features and keep the major medical coverage in place you could
conceivably cut the cost of your health insurance
premium considerably. He was absolutely right.
To illustrate how
Terry's idea works in the real world. We will use a real world
example. Tony & his wife
are currently paying $1,134 a month for
Cobra continuation coverage from a previous group plan. In
comparison, the monthly premium for an HSA qualified HDHP
(High Deductible Health Plan) which covers each insured family
member up to and unlimited lifetime coverage amount is less than half of the
premium that they are paying now ($550.64 monthly to be exact). This
is a yearly savings of $7,000.32 or a monthly savings of $583.36.
This is a significant
difference. However the insured has to give up all of their
outpatient co pays. Is this worth it? This was the question posed to
Terry when he approached Congress back in the late 1990's. His answer
to Congress was simply "make it worth it".
In other words, he
asked Congress to make it worth it to the insured. Allowing the
policy holder to save that extra money each year on a tax deferred
basis makes it worth it. For the year 2015 the maximum contribution a
couple or a family can make to their HSA (Health Saving Account)
is $6,650. In addition, any
family member who is 55 years of age or older can deposit an
additional $1,000 annually (more on the age 55 allowance below). This
means that the total amount that Tony and his wife can deposit per calendar year is $8,550
since he and his wife are both over the age of 55. The best part is they can take a
100% tax deduction for that contribution similar to an IRA.
Furthermore, if you do incur medical expenses that arise throughout
the course of the year that are subject to the deductible (i.e.
prescriptions, doctor's office visit charges, etc.) the IRS will
allow you to pull out that money that you put into your tax deductible, tax
deferred Health Savings Account to pay for those expenses. When you
use their HSA money to pay for those expenses the IRS will
allow you to write those expenses off at a 100% tax deduction. The
list that the IRS allows you to spend your HSA money on is
very liberal and includes things like dental, orthodontics,
eyeglasses, radiokeratonomy (Lasik
corrective eye surgery), alternative medicines etc.
Click here to see the
entire list of allowable expenses.
Arguably the most
attractive tax advantage to owning an HSA is the fact that the
money left over in the HSA account
that was not used on medical expenses at the end of the
year is "rolled over" into the next year and awarded a higher rate
of tax deferred interest. The insured also has the option to roll
those unused funds into no load mutual funds, thereby building an
extra tax deferred retirement account with money they would have
normally given to the insurance company each and every year whether or not they had any claims that
It should also be noted that not having a "co pay" with your plan does not
mean that your outpatient doctor visits and outpatient prescription
drugs will not be a covered expense. With most HSA qualified HDHP's
these charges are a fully covered expense just as they would be with
Traditional Health Insurance Plan.
The only difference is these charges will be subject to the health
Being "subject to deductible" does not mean that you will pay full
price for these charges either. If you stay within the vast PPO
network that most reputable carriers offer (www.phcs.com)
your outpatient doctor office visit charges will be discounted by as
much as 40%. Your prescriptions will also be discounted
significantly as well by staying within the Rx prescription network.
Let's break that down in plain English. Let's say your doctor's
office charges you $100 for a "sick visit". If you use a PPO
provider those office charges will be
"re-priced" down to roughly $60. Now compare that to a Traditional
plan which provides you with a $30 "co pay". The difference to you
is $30 out of pocket for that doctor's office visit. But is that all
you are really saving?
Not if you add in the monthly premium savings between the two plans.
The typical monthly premium savings between a Traditional plan and
an HSA qualified plan for a family is $200 monthly. This equates to an
annual savings of $2,400.
Now let's take that $2,400 annual savings and deposit it into a tax
deferred, tax deductible interest bearing account. Let's go a step
further and imagine you find an HSA account that bears you NO
interest AT ALL (which is not that hard to imagine in this economy).
You're still saving $2,400 annually and you're deducting that amount
from your adjusted gross income. This means less reportable income
which means less taxes.
Now lets imagine you have no major medical claims in year two and
you deposit the same amount. Now in year three you have a worse case
scenario occur. Now you have $4,800 to help pay your plan
deductible. Not to mention any additional funds you deposit into
your Health Savings Account during that same time frame.
In summary, the advantages to owning a Health Savings Account are as
1.) Unlike any other IRA,
a Medical IRA (HSA) allows you to withdraw
funds at any time with no penaltyfor "qualified
medical expenses". Most
importantly, when you withdraw your HSA
funds to pay for any of the qualified
medical expenses on that list, those
expenses themselves become 100% tax
2.) Here's the key point
though. If you have just ONE year without
any significant claims andyou even partially fund your
Medical IRA, then if the worse case scenario
occurs, you will have those funds available
and be able to withdraw them with no penalty
and use that money to help pay your calendar
year health plan deductible. In year 2 (with
no major claims) you are that far ahead of
the risk management game. In
fact, no other kind of Health Insurance
actually allows you to lower your risk the
longer you own it by hedging money you would
have otherwise given an insurance company
for a Traditional plan.
I say this because, there
is no other kind of IRA that you can
withdraw from at any time with no penalties
and then use those withdrawals to pay for
medical costs and receive a 100% tax
deduction for those expenditures. In fact,
the longer you own
an HSA qualified HDHP, the lower your risk
becomes since the more years that pass, the
larger your balance in your HSA account
becomes. This is so because each year your
remaining balance rolls over and continues
to earn tax deferred interest.
The longer you look at HSA qualified HDHPs the more sense they
make. This is why they have caught on like wildfire and will
continue to do so. The only inhibitor to the spread of HSA's is lack
of education (as is the case with any other financial vehicle) The
"Whole Foods" supermarket chain chose HSA qualified Health
Insurance. It worked so well for them that they were recently
featured on the ABC 20/20 episode entitled "Sick In America" with John Stossel:
To learn more about
HSAs and the recent federal legislation that has made them even
more attractive to people over the age of 55 click
read all about them on the Federal Government's HSA educational
web site. To learn more about HSAs in a power point
presentation format please click here:
and click on the informative videos on the
If you are an employer
and are considering HSA qualified plans for your employees consider
this. An individual's employer can make contributions that are not
taxed to either the employer or the employee. The combined income
and payroll tax deductibility leads to discounts for health
insurance of over 40% in some cases relative to other forms
of insurance. For more details for the employer
For the best interest rates you will find
just about anywhere on a Health Savings Account
with questions about HSA qualified HDHPs. If you have a
C.P.A. or tax advisor please feel free to ask he or she about the
advantages of owning an HSA as well.
Assurant, a Fortune 500
company and a member of the S&P 500, is traded on the New York Stock
under the symbol AIZ. Assurant has
approximately $29 billion in assets and $8 billion in annual
revenue. Assurant has approximately 14,500 employees worldwide and
is headquartered in New York's financial district. Assurant Health’s
products are underwritten and issued by John Alden Life Insurance
Company, Union Security Insurance Company and Time Insurance
Company, which has been
in business since 1892.
Headquartered in Milwaukee, Wisconsin, Assurant Health employs
approximately 2,000 employees. Assurant Health is rating
A-(Excellent) by A.M. Best ratings.
To get quotes & apply online for Assurant Health's temporary health
insurance click their logo below:
You will owe a non compliance 'fine' to the IRS for buying short
You must also understand
that you will be subject to a 1% of your MAGI 'fine' (TAX) for
purchasing temporary health insurance since these plans do not
include the "essential health benefits" under Obamacare such as
Maternity for 62 year old women and single men, drug rehab coverage
for those who do not own a crack pipe and pediatric dental for those
without children. As such temporary policies are not considered
'qualified health plans'. Rest assured though, if you are self
employed and do not over pay your taxes you will never pay that
'fine' (TAX) for the only recourse the IRS has to collect that fine
is to hold your tax refund. All criminal penalties for non
removed from the health care lawprior
If your pre-2014
individual plan is renewing in 2014 that is a 'qualifying event'
are now honoringthis
states quite clearly that if you have an 'old' policy from the 'old'
market and that plan renews you can purchase a 2014 'qualified'
Bronze, Silver, Gold or Platinum health insurance plan onor
on a guaranteed issue basis between open enrollment periods. This is
VERY good news for anyone who has an 'old policy' that renews this
year and is facing a large premium increase and/or has exclusion
riders on their existing policy and wishes to purchase a new 2014
plan without exclusion riders.
At this juncture, Assurant
Health is the only carrier that we are aware of that is honoring
the aforementioned regulation and as such they have a corner on the
market until the next open enrollment period begins on November 15,
2014 for coverage effective dates beginning no sooner than January
1, 2014. As I statedin
this recent article, many health insurance carriers like Aetna
and Humana are not even offering short term (temporary) health
insurance products until the next open enrollment period and the few
carriers who are offer them with dangerously low lifetime maximum
coverage amounts. It must also be reiterated that if you purchase
short term coverage these policies do not cover preexisting
conditions and you will be subject to a1%
of your MAGI 'fine'(TAX)
from the IRS if you purchase short term coverage because those plans
considered 'qualified health plans'under
CMS and HHS regulations.
If your old health insurance plan is renewing in 2014 and you wish
to get quotes from Assurant Health for a qualified replacement plan
click their logo below. There is a now a new section on the
application where you will need to either upload a copy of your
existing health insurance ID card proving that you have a policy
from the old market or you can fax a copy of your old ID card to the
fax number provided on the application. This is necessary to prove
that you qualify for a special enrollment period as an applicant
with a qualifying event.
insurers will not offer health insurance again until November 15,
last date to purchase individual, renewable
health insurance during the first open enrollment period in 2014 was
If you missed the first open enrollment
period and do not qualify for a
enrollment period, you can
still stay insured between open enrollment periods by purchasing non
renewable, short-term health insurance from Blue Cross Blue Shield
of Illinois. BCBSIL offers affordable, quality short-term health
insurance plans that can keep you covered until the next open
enrollment period which begins on November 15, 2014
with effective dates starting January 1, 2015. Whether
you have experienced a 'qualifying life event'
and qualify for a 'special enrollment period, or you wish to shop
for temporary health insurance click the logo
below to compare BCBSIL plans and find the right health
insurance plan for you and your family.
United HealthOne is no longer offering health insurance products of
any kind in Illinois as of January 1, 2014. They do offer fixed
indemnity plans, these are not health insurance products and we do
not recommend purchasing fixed indemnity plans. The risk
exposure is too great.
United HealthOne is offering temporary health insurance outside
between open enrollment periods in 2014.
Click the United HealthOne
logo to apply for
health insurance on or off the health insurance exchange.
These plans will be available for sale again on November 15, 2014
with effective dates beginning January 1, 2015.
Depending on what your 2014 total household MAGI - Modified
Adjusted Gross Income - will be, you may qualify for a
significant federal subsidy under the new health care law to
lower your premiums. The next date to find out is November 15,
2014 when Medal renewable health insurance plans are available
again for sale during the next open enrollment period.
If your 2014 total household MAGI -
Modified Adjust Gross Income - will be lower than:
$46,680 for an individual $62,920 for a couple
$79,160 for a family of three $95,400 for a family of four $111,640 for a family of five $127,880 for a family of six $144,120 for a family of seven $160,360 for a family of eight
you will be better off financially by buying a new health
insurance plan inside the health insurance exchange implemented by the PPACA - "Patient Protection &
Affordable Care Act" - otherwise known as "Obamacare". By doing
will qualify for an APTX - Advance Premium Tax Credit (federal
subsidy) - to reduce the cost of either the Bronze, Silver, Gold
or Platinum health insurance plans offered inside the health
Click the Humana logo below to apply for coverage with Humana inside or outside
of the new health insurance exchange. These plans will be available for sale
again on November 15, 2014 with effective dates beginning January 1,
2015. Humana is not offering temporary health insurance coverage
between open enrollment periods in 2014.
Click the Aetna logo below to apply for coverage with Aetna inside or
outside of the new health insurance exchange. These plans will be available
for sale again on November 15, 2014 with effective dates beginning January
1, 2015. Aetna is not offering Temporary health insurance between open
enrollment periods in 2014.
Since accidental injuries are far
more likely to occur than major medical illnesses (most especially
when you have active children) many families are choosing to
purchase supplemental accident expense plans. These plans pay you a
cash benefit of $2,500, $5,000, $7,500 or $10,000 when an accidental
injury occurs. This cash can then be used to pay your health
insurance plan deductible. Supplemental Accident Expense plans are
also a great way to save money because you can choose a higher
deductible than you would normally choose knowing that you will not
have to pay that deductible if an accidental injury occurs to any
member of your family. Click below for more information:
Supplemental Accident Expense plans can also be coupled with Critical
Illness plans. In fact, Supplemental Accident Expense plans are often
cheaper when coupled with Critical Illness plans. Why consider Critical
1.2 MILLION people
suffer heart attacks each year.
780,000 people suffer
strokes each year.
1.4 MILLION new cancer cases were estimated for diagnosis in 2007
alone. Between 1994 and 2004, the death rate declined approximately 31%
for heart attacks and almost 24% for strokes. (Source: American Heart
Association, Heart and Stroke Statistical Update, 2008.) The possibility
of surviving a Critical Illness before age 65 is almost twice as great
as dying. (Source: National Center for Health Statistics.)
WOULDN’T A CHECK BE BETTER
THAN A GET WELL CARD? Critical Illness benefits are paid directly to
you. You choose how to spend the benefit at a time when you and your
family may need extra cash the most. For example:
Home Health Care
Cost of Caregivers
Lost Income of Self or Spouse
Daily Living Expenses
Co Pays, Deductibles & Co-Insurance
Non -Covered "Experimental Treatments
Housekeeping or Child Care Expense
Maintenance of Your Family's Quality of Life
Colorado Bankers Life
has partnered with
to offer a Critical Illness plan that is extremely
well priced. Adding this product to any health insurance
plan would alleviate the worry of paying your
health plan deductible if you or a family member were to
develop a critical illnesses such as life threatening
Cancer, Stroke, or Heart Attack. For more
information about this unique and affordable plan click
the brochure below. If you have questions please