Despite the alarming cost of health care in the U.S., the largest health insurance companies continue to post record profits for three straight years. While you might think those profits are straight out of frequent and large premium increases, another trend is driving insurer profits.
Bigger co-payments to see a doctor may be discouraging people from making doctor appointments. Even among those with health insurance benefits, covered members are seeking less health care. Health insurers just continue to pocket the premiums whether or not they spend much on doctor and hospital care for members.
With health care reform, insurers are being required to spend at least 80 percent of the premiums collected on health care for the members paying those premiums. That could take a bite out of record profits, but insurers also have another advantage.
High-deductible health insurance plans have been seen to discourage health care consumption. To lessen the risk of people putting off seeing a doctor until their health deteriorates, health care reform has also taken a lot of the risk out of plans with high deductibles.
High-deductible Health Insurance Plans Totally Cover Preventive Care
As premiums rose, both companies offering employees health insurance and people shopping for their own health insurance switched to high-deductible health insurance plans to keep their insurance premiums low. Before health care reform, policyholders were hesitant to spend from $1,000 to $10,000 to meet the deductible. That meant not seeing a doctor for far too many people.
Health care reform doesn’t change plans previously purchased, but it does mandate that any plan you buy after health care reform became law provide recommended preventive care with no out-of-pocket costs. That means the plan’s deductible does not apply to annual checkups, many vaccinations, and the most common screening procedures to detect life-threatening problems like cancer, diabetes or heart disease.
With 100-percent preventive care coverage, high-deductible health insurance plans have become a legitimate way to invest in your own future rather than in an insurer’s profit margin. With preventive care covered, you’re less likely to meet a plan’s deductible. As long as your health is relatively good, you can take on a little more risk by trading low premiums for a high deductible.
A Health Savings Account Is An Investment In Your Future
To invest in your future, look at the policies that allow you to open a Health Savings Account (HSA). With one of these tax-advantaged accounts, you can invest what you save on premiums in bonds, mutual funds, stocks or an interest-earning savings account. No matter how much your HSA earns, the balance will roll over from year to year and you won’t have to pay taxes on the growth.
At any time before or after retirement, you can withdraw HSA funds to see a dentist, get a medical massage, or buy any number of health-related services without paying taxes on the withdrawal. You can spend your HSA money for your spouse’s or partner’s or dependent’s health care, too, even if they are not covered by your policy. Just be careful to only use HSA funds for legally eligible health-related products and services, or you’ll have to pay a 20% penalty.
Every year that you contribute to your HSA, though there is no minimum requirement to do so, you can lower your taxable income by the amount you deposit before April 15. Add what you save in taxes and on premiums to your tax-free interest, and you’ll see a real investment in your future. HSA health plans are a way to keep your money in your account, rather than an insurance company’s account.