Addicted to copay? Tired of paying premiums? Don’t understand what any of this means? Regardless of where you stand, Employers Committed to Control Health Insurance Costs (ECCHIC) is here to help! We do so by providing assistance to our clients in as many ways as possible, which often means sharing valuable information. When it comes to health insurance, the knowledge required to understand exactly what you are paying for can be quite daunting and often difficult to access. That’s where ECCHIC comes in: we not only aid in finding affordable group health insurance for your business, but provide insight into what makes up your total costs. This is where premiums come into play.
What is a Premium?
A premium is the amount you pay for health insurance every month, much like a car payment. To be insured, policyholders are required to pay the fixed amount, regardless of whether or not they use any healthcare services. Now that doesn’t sound fair, right? Unfortunately, most people have no idea what is going on beneath the premium. What exactly are you paying for and why?
How Can You Bust a Premium?
Busting premiums is made easy with a Health Savings Account, which allows you to pay for services outside of the insurance system. This is extremely beneficial because you can avoid the 40% markup that insurance companies often charge. A premium is put in place to hide the overcharge, even though carriers are buying the services at a discounted price. Our advice is simple: Stop allowing these companies to sell you healthcare services at retail price when you can be paying wholesale with an HSA.
What is a Health Savings Account?
An HSA is a triple tax advantage savings account, which means that money goes into it on a pre-tax basis. This enables the account to not only earn interest tax free, but be used on medical expenses without taxes. Hence, the triple tax advantage! To take advantage of these savings, one must be exclusively enrolled in an HSA qualified high deductible health plan. ECCHIC is here to help employer groups understand these guidelines and bring this type of plan to fruition for their employees. Health Savings Accounts are the only product on the market today that are triple tax advantage, but they have several other benefits as well:
- Lower Premiums: Generally, employers are going to ave quite a bit of premium because the HSA is money that is owned by the employee. The lower deductible-copy type plan that is most often used today encourages people to overspend due to the desire to “make use of their insurance dollars.” However, placing ownership in the hands of the employee leads to an invested interest in not wasting their own healthcare money.
- Lower Cost Per Unit of Medical Services Used: Insurance companies are the main beneficiary when using traditional methods. This is because they buy healthcare services at a discounted price and then charge as much as a 40% markup from the cost of the service itself. Sounds like a win-win for them right? An HSA enables people to buy services at the wholesale price and avoid all of the underlying costs that are hidden in premiums.
- Lower Taxes: An HSA allows individuals to pay for medical expenses with tax-free dollars. This includes doctor visits, prescriptions, dental and vision. These pre-tax dollars can even be used to pay medical costs for family members that are not included in the insurance plan! So, what does this mean? State tax savings, federal tax savings and even social security tax savings. Unfortunately, less than 20% of what Americans pay for currently goes through a triple tax advantage. This means people are overspending by nearly 20 to 30%.
- Financial Freedom: The unspent HSA balances roll over from year to year, which eliminates the dreaded “use it or lose it” requirement. Whether the money is spent this year, 10 years from now or into retirement, individuals can feel at ease knowing their money is protected. In addition, participants can change how much money they are deducting to go into their HSA on a monthly basis. There is a maximum amount set yearly by the federal government, but there is no minimum.
Downsides of an HSA
A high deductible can be quite alarming for some. However, it eliminates expensive copays and saves on premium dollars. While the smaller medical bills are paid out of pocket, they are done so with tax free money. This equates to enormous savings. Plus, interest grows on the HSA funds, adding to the amount that can be used in the case of an emergency.
In addition, some employers contribute to the Health Savings Account to help offset initial costs. These costs are referring to any payments made before the deductible is met. Many employers allocate money to eliminate this potential concern. There is a misconception that healthcare services are paid for at full price due to the lack of interference from insurance companies. However, all services are still provided at the insurance company negotiated discount price. Therefore, participants still receive the PPO discount in an HSA plan.
Take Charge of Your Healthcare Dollars
Let’s bust premiums before the premiums bust us!
Take back your control with ECCHIC; we are devoted to education and empowerment. We will help your business create an insurance plan that benefits BOTH the employer and employee.
Give us a call at (314) 997-8865 or contact us via our website HERE.