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Have You Ever...- 8-29-07

Thought of Purchasing Your Own Health Insurance?

By ChaChanna Simpson

I’m sure some of you probably haven’t , but you do have the option to do so. When I decided to start my business, three years ago, I was not looking forward to getting my own health insurance. I knew it would be expensive. I asked a fellow freelancer how much they were paying for health insurance and she told me, $400 a month. At that time, I thought I was going to have to be making $5,000 a month in order to afford my own insurance but I recently discovered that is not the case. There are other options and avenues to take besides COBRA, which costs a lot.

So for those of you who are considering going out on your own or those who are living off of temp agency work and not able to qualify for insurance with those companies, you can still be covered.

What is a Health Savings Account (HSA)?
This bill was signed into law by President Bush on December 8, 2003. It is an account you can put money into to meet your future healthcare needs, tax-free. This program is cheaper because it comes with a high deductible health plan. It works like your deductible for your car insurance. You have to reach the annual limit before the benefits kick in. For example, let’s say your annual deductible is $1,250. If you went to the hospital and your bill came up to $5,750, you would have to pay $1,250 and the other $4,500 would be covered by your plan. According to federal law, the annual deductible has to be at least $1,100 for individual coverage and $2,200 for family coverage.

The added bonus to getting an HSA is that you can put money away throughout the year that can be used towards your deductible payments or additional medical coverage. If you don’t use the money that year, it rolls over to the next year.

There is a limit to the amount you can add to the account each year. For 2007, you can only contribute up to $2,850 for individual coverage and $5,650 for family coverage per year. As well as using your HSA for medical reasons, you can invest your account into stocks, bonds and mutual fund accounts and any earnings you make on that money will be tax-free. If you decide to take the money out of your account for reasons other than paying for medical expenses, you will have to pay taxes and a 10% penalty.

Who’s eligible?

According to The Department of the Treasury’s website, any adult can be covered by an HSA as long as you are not covered by another health insurance that has a high deductible plan; have no other first-dollar medical coverage (other types of insurance like specific injury insurance or accident, disability, dental care, vision care, or long-term care insurance are permitted.); are not enrolled in Medicare (we don’t have to worry about this yet) and can’t be claimed as a dependent on someone else’s tax return.

The benefits of getting an HSA now are:

If you don’t have a job or if you are working on your own you can still get coverage
More affordable than traditional health insurance
Tax advantages
You get to pick which company will hold your account
You can choose how you want to use your money
No matter if your job changes, change coverage, become unemployed, or change your martial status, you can keep your HSA
Save money in your account for future medical expenses and grow your account through investment earnings
You can use your plan to cover your dependent children and spouse even if they are not on your plan

Finding an HSA-qualified program is not difficult. Any company that sells health insurance coverage such as Aetna, United Healthcare or other big named companies may offer the plan. To find one in your state, call your current insurance company, agent or broker licensed to sell health insurance.

For more information go to the Department of the Treasury HSA website at http://www.treas.gov/offices/public-affairs/hsa/.

The preceding information is for 2007 amounts.

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