HSPs provide several key advantages over traditional insurance plans, such as lower monthly premiums and tax-free savings accounts.
HSPs may not meet all of the regulations necessary for being classified as insurance, which puts participants at some risk in terms of legal protections and minimum essential coverage requirements set by ACA.
High-Deductible Health Plan (HDHP)
An HDHP is a health plan combined with a tax-advantaged Health Savings Account (HSA). Together, this combination allows greater control over how and where healthcare dollars are spent.
HDHPs generally feature lower monthly premiums than plans with lower deductibles, making HDHPs attractive options for those with modest health care needs. Someone requiring only annual physicals and preventive screenings could save hundreds of dollars every year by switching to an HDHP from traditional plans with lower deductibles.
As with other health insurance, an HDHP covers expenses once your deductible has been met, unlike traditional plans which often charge copays before meeting this goal. Furthermore, to qualify as an HDHP plan requires both a higher deductible and out-of-pocket maximum than traditional ones.
Some benefits of HDHPs lie in their tendency to encourage consumers to shop around and seek cheaper care, but this doesn’t always happen – a recent study found that people with HDHPs don’t necessarily seek out less-expensive care, often paying more than with traditional plans with lower deductibles.
HDHPs also typically boast lower monthly premiums compared to plans with fewer benefits and higher deductibles; for instance, enrolling in an HDHP with a $3,600 deductible costs less per month than having a traditional plan with an $8,050 deductible.
HDHPs and HSAs may not be suitable for all. You are ineligible to contribute to an HSA if you already have other healthcare coverage such as a flexible spending account, employer-sponsored retiree health plan, Medicare Part A/B coverage or TRICARE; also you cannot use HSA funds for non-emergency travel expenses like over-the-counter drugs or over-the-counter travel expenses. Therefore, before selecting an HDHP it’s wise to carefully consider your options before selecting it; such plans could provide lower monthly premiums as well as allow health savings accounts that cover expenses not covered by plans such as qualified medical expenses not covered under its coverage.
No Pre-Existing Condition (PEX)
Before the Affordable Care Act was implemented, many states provided high-risk pools or similar programs for people with preexisting conditions who did not qualify for regular health insurance coverage. Typically these policies looked back five or more years and excluded any conditions which arose during that time from coverage limits; by comparison HSPs include preexisting conditions within their coverage limits without an additional deductible or coinsurance payment requirement.
Most traditional health plans require consumers to meet a deductible before medical expenses will be covered, while HSPs do not. For some consumers this makes them an appealing option; however, it should be remembered that HSPs don’t often offer as many legal protections compared to traditional plans, meaning if an unexpected health issue arises that HSPs don’t cover properly they could face considerable financial challenges.
Contrary to traditional insurance plans, health savings accounts (HSPs) do not usually provide discounts for service costs that have not yet been negotiated – saving consumers money by limiting how much providers charge for any given procedure and as most HSPs have far fewer members than traditional insurers do they tend not to have as much bargaining power with providers when trying to negotiate costs down.
HSPs may exclude certain medical costs that don’t fit with their values and beliefs, such as addiction treatment or out-of-wedlock births, from sharing. Or they might only cover part of an expense; leaving consumers to shoulder any remaining cost themselves.
An HDHP offers lower premiums than traditional health plans while providing tax benefits as well. Individuals who opt for such plans may contribute to a health savings account (HSA), which allows consumers to pay out-of-pocket healthcare expenses tax-free and save tax with each contribution made throughout the year compared to flexible spending accounts (FSA) or health care flexible spending accounts (HCFSA). Unused contributions in HSAs carry over from year-to-year allowing individuals greater financial freedom.
HSPs can be an attractive alternative to traditional health plans, but they’re not suitable for everyone. To determine whether an HSP is right for you, take into account several key considerations.
Flexibility
HSPs’ flexible benefits programs provide employees with a variety of healthcare options. In addition to health savings accounts and tax-free health reimbursement arrangements (HRAs), which roll over year after year – perfect for covering unexpected expenses or covering FSA/HCFSA overages. Furthermore, some HSPs also provide property coverage against natural disasters or events which could disrupt business.
HSPs may feature similar deductibles as traditional insurance plans; however, they should not be considered insurance in the strict sense. Instead, HSPs operate more like cooperatives that enable members to share medical costs among themselves in return for paying a monthly “share” contribution that is significantly less than premiums from traditional plans.
HSPs can offer more cost-effective insurance alternatives for individuals and families with higher incomes, while some HSPs have strict eligibility requirements relating to religious beliefs or ethics/moral values. Furthermore, the smaller membership size may limit HSPs from negotiating discounted rates with providers.
HSPs may cover most or even all of an individual’s healthcare expenses once they meet their deductible, while also permitting members to select their healthcare providers from among a wider network. This allows for more flexible care options and may allow employees to use alternative healthcare providers like naturopathic doctors or chiropractors if desired.
HSPs may accept pre-existing conditions; however, they are not mandated by federal regulations to do so. Thus, potential members should carefully read each plan’s terms before joining one; certain HSPs may only cover pre-existing conditions after paying into it for some amount of years.
HDHPs with HSAs are becoming increasingly prevalent, yet many employees still have questions regarding them. Employee Benefit News spoke with industry experts regarding some key considerations for both employers and employees when considering this benefit option.
No Legal Protections
As HSPs provide health insurance, they must abide by state laws and regulations; however, unlike traditional providers they lack the same legal protections which could allow a member who experiences problems to file suit. Furthermore, many HSPs limit coverage to an agreed upon dollar amount meaning any extra costs incurred must be covered by themselves.
Whoever wishes to reduce healthcare expenses and avoid expensive tax penalties should consider enrolling in a health share program (HSP). When considering the costs and benefits, individuals must carefully weigh both sides – for instance an HDHP typically offers lower monthly premiums compared to traditional health insurance but may have high deductibles and copays, not to mention no preexisting condition coverage.
HSP members also benefit from low monthly premiums and the chance to open a health savings account (HSA), which allows them to set aside pretax dollars deducted from paychecks as they save them, for non-covered medical expenses not covered by traditional health insurance plans. Furthermore, these funds do not incur federal income taxation and roll over from year to year – an advantage over traditional policies which often do not permit this feature.
Many people opt to join an HSP due to its flexibility and affordability. Unlike traditional health insurance policies, these programs rely on a shared responsibility model instead of a network of healthcare providers to reimburse members’ medical expenses. Before enrolling in an HSP policy it’s important to read carefully through it to understand how it operates.
FSRA requires all licensed HSPs to submit monthly statements to members that detail payment requests and contributions that have been made in that month, along with an Annual Regulatory Fee submission in order to maintain their license. HSPs who fail to do this could face regulatory action and/or the suspension/cancellation of their license.
