| Other Health Insurance Options and Plans |
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| Federal Tax Advantaged Options |
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There are some types of arrangements that give you a tax break to help pay medical expenses. The Health Savings Account (HSA) and Health Reimbursement Arrangements (HRAs) typically are paired with high-deductible health plans. The Flexible Spending Account, on the other hand, typically is a benefit offered in addition to insurance. That's because it provides tax breaks to cover medical/dental expenses that are not covered by insurance. Here is a summary of some of the different features of these programs. As you can see, an HSA can be set up by individuals or employers. However, the HRAs and FSAs must be set up through an employer.
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Health Savings Account
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Health Reimbursement Arrangement (HRA)
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Flexible Spending Account (FSA)
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What is it?
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An HSA is an IRA-like account that individuals can set up or employers may make available to employees. You can make contributions with pre-tax dollars that can be used to pay current or future medical expenses. Although you can't use this money to pay the monthly insurance premium, you can use it to pay the deductible. Money you put in this account also can fund long-term care insurance or retirement after age 65. The account must be paired with a qualified, high-deductible health plan.
Insurance companies list plans that can be paired with an HSA.*
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These are employer-sponsored arrangements that allow employers to help reimburse employees for medical expenses.
Many employers combine these with a high-deductible health plan to provide protection against catastrophic loss.
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These accounts, offered through an employer, allow employees to set aside pre-tax dollars through salary reduction. You choose the amount to come out of your pay check. Money in the accounts can be used for medical/dental expenses not covered by insurance. This might be certain over-the-counter medications, for example.
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Who funds it?
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Employer and/or employee
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Employer
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Employee, usually
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Who "owns" it?
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Employee
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Employer
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Employee
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What happens to unused funds at end of year?
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Funds carry over and accumulate from year to year
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May carry over at the employer's discretion
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Forfeited to employer
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Tax benefits
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Tax savings for employer and employee when funds spent on qualified medical expenses.
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Tax savings for employer and employee when funds spent on qualified medical expenses, as defined by employer.
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Tax savings for employee and employer if funds spent on qualified medical expenses.
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*More on Health Savings Accounts (HSAs) with high-deductible health plan:
- There are federal rules that apply to both the health plan and the account itself. For example: the plan's deductible must be at least $1,100 in 2008 for an individual. The health plan may provide preventive benefits such as well-child care or annual physicals without having to meet the deductible. Your plan can include prescription drug coverage but benefits are subject to the deductible.
- The money in your account may be used tax-free to pay qualified medical expenses, including the deductible. Although your regular insurance premiums aren't a qualified medical expense, premiums for long-term care coverage are. If you withdraw money for non-qualified medical expenses prior to age 65, you pay a penalty.
- Businesses may deduct contributions to HSAs and their accompanying high-deductible health plans, just like traditional insurance.
- There is a limit on the amount you (and/or your employer) can deposit into the HSA account every year. These amounts change annually.
- Summary: This account is similar to an IRA in that money in the account can be invested and grow tax-free. The money can be taken out without penalty at age 65 although regular income tax applies.
- For more information: www.treas.gov
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| Short-Term Policies |
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As the name suggests, these are plans designed to fill a temporary need, such as when you are between jobs or just graduated from college or are waiting to be covered under a group medical plan. Some key features:
- Length of coverage: You choose the start and end date for your medical coverage. The policy can be as short as 30 days or up to 185 days.
- Benefits: Plans vary but typically cover major hospital, medical, and surgical expenses. Preventive benefits typically are not covered.
- Pre-existing conditions: Pre-existing conditions (from a certain period prior to the start of the policy) aren't covered. Different companies have different "look back" periods. Some won't cover pre-existing conditions you had within the past six months. Others won't cover conditions you had for the past five years. Also, any conditions that might develop during one policy won't be covered in a new policy if an extension is granted.
If you have a health condition and find yourself in need of temporary insurance, there may be better choices. Talk to an insurance agent or an insurance company for help.
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| Supplemental (or limited benefit) Plans |
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Here are some types of coverage you see advertised. They are typically offered in addition to regular insurance. They are designed to help with expenses not covered by your health insurance. They are not designed to substitute for comprehensive insurance.
Disease coverage: Covers treatment of a specific disease, such as cancer or a heart attack. These policies offer limited benefits for the actual diagnosis and/or treatment of the disease. For example, a policy may offer a lump sum benefit if diagnosed with cancer. Or, the policy may cover certain health care costs and expenses. Some other key issues:
- If you already have health insurance, see what your out-of-pocket costs might be. Make sure any cancer policy will meet needs not met by your major medical policy. To understand this, you may need to review both policy contracts - your major medical policy and the disease policy.
- If you don't have comprehensive health insurance, consider buying this before purchasing a disease-specific, limited-benefit coverage.
- These policies generally won't cover any disease or sickness that is diagnosed prior to the policy start date.
- Make sure you understand what isn't covered by this policy as well as the limits on what is covered.
Hospital confinement indemnity coverage: Covers a fixed amount for each day that you are in a hospital regardless of the actual charge. The intent is to cover deductibles, coinsurance, and other out-of-pocket expenses not covered by comprehensive medical insurance.
Accident only coverage: Covers death, dismemberment, disability, or hospital and medical care caused by an accident.
Disability: This replaces income you lose if you have a long-term illness or injury and can't work. Benefits from these plans can be used for expenses such as rent, utilities, or groceries. This insurance typically doesn't cover rehabilitation costs following an injury or illness. Usually, these costs are covered by your health insurance plan. Your employer or your health insurance company might offer this coverage.
Dental/vision care: If you get insurance at work, your employer may offer dental and vision along with health insurance. You may need to pay all or part of the costs for dental. Plans typically have a maximum annual benefit such as $1,000 or $1,500. Preventive care, such as your annual check-up, is often covered at 100 percent. Major restorative care, such as bridgework and crowns, generally is covered at 50 percent. Routine care, such as fillings and root canals, typically are covered at 80 percent.
Often, employers negotiate with ophthalmologists or vision centers to get discounts on vision care for their employees. If you don't get insurance at work and buy an individual or family plan, you may add dental coverage.
Long-term care: These policies cover a range of medical, personal, and social services. You might need this care if you have a chronic illness or disability. Long-term care insurance covers care in various settings, including adult day care, nursing homes, or even your own home. There are a number of choices. Plan features you should understand:
- Elimination period: A number of days you must need nursing home care or home health care before your policy pays. A shorter elimination period means a higher premium.
- The daily benefit your policy will pay? Most pay a fixed amount, $50 to $250 a day.
- How long will your benefits be paid? You select a benefit period to have. It might be one year to the rest of your life.
- What exclusions are listed in your policy?
- Medicare does not pay for long-term care. Some older adults with lower incomes qualify for Medicaid, which pays long-term care bills.
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| Discount Medical Plans |
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These are not health insurance. Valid cards get you discounts on services from doctors and other providers who accept the card. Even if the card results in discounted charges, you could still owe thousands of dollars if you are hospitalized with a major illness or from a serious accident.
Medical discount plan organizations doing business in Oregon must be licensed by the Department of Consumer and Business Services (DCBS). A medical discount plan organization must also:
- Have a written contract with providers or provider networks who offer services at a discount
- Provide a free-look period for purchasers with a 30-day right to cancel
- Have a toll-free customer assistance number and
- Comply with refund requirements, advertising restrictions, and disclosure standards.
If you or someone you know has questions about discount plans, call the Oregon Insurance Division's Consumer Advocacy Unit at 888-877-4894 or 503-947-7984.
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