Insurance strategy

[Da Nag]

I'm just familiar enough with my upcoming insurance needs to be dangerous...can y'all provide some guidance?

Our situation: My wife and I will need to pay for our own coverage for three years, starting in Februrary 2012. We'll be 51, both in excellent health/shape, no known pre-existing conditions. Coverage will be in WA.

Starting in February 2015/age 54, we'll get up to $1100/month health insurance benefit to spend towards coverage when our pensions kick in.

Covering part of the gap with COBRA would be too expensive. We both work at the same place, and of the three plans offered Blue Cross is our only option based on where we're moving. Cost would be $1200/month - not in the budget. We're hoping to keep cost to $500/month, but there's room to stretch it if we had to. Based on what I'm seeing over at ehealthinsurance, it looks like we've several options.

I guess my main question, is whether an HSA makes sense given the above. My thought being, that we would only contribute to it during the three years we're without the health insurance benefit, as the HIB funds can only be used to fund premiums once they kick in.

Thoughts/advice?

 

[67walkon]

There are some companies that "share" medical expenses. Medi-share is a Christian organization that does that. I haven't used it, but it seems to work similar to insurance, but at much less cost. We've looked at it because my wife will have, hopefully, 7 or 8 years after I quit working and before she qualifies for medicare. If we can't find a better alternative for me, I may have to pay one of the really high premiums for a few years, but she doesn't have any potentially expensive pre-existing conditions, so hers would be cheap. Check it out.

 

[SteveL]

Are you and your wife healthy with no pre-existing conditions that you have received treatment for in the last year? If not WA can be a difficult state.

To have an HSA you need a qualifying HDIP. See IRS Pub 969 for details.

High deductible health plan (HDHP). An HDHP has:

• A higher annual deductible than typical health plans, and
• A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. Out-of-pocket expenses include copayments and other amounts, but do not include premiums.

An HDHP may provide preventive care benefits without a deductible or with a deductible below the minimum annual deductible. Preventive care includes, but is not limited to, the following.

1. Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals.
2. Routine prenatal and well-child care.
3. Child and adult immunizations.
4. Tobacco cessation programs.
5. Obesity weight-loss programs.
6. Screening services. This includes screening services for the following:
   
   1. Cancer.
   2. Heart and vascular diseases.
   3. Infectious diseases.
   4. Mental health conditions.
   5. Substance abuse.
   6. Metabolic, nutritional, and endocrine conditions.
   7. Musculoskeletal disorders.
   8. Obstetric and gynecological conditions.
   9. Pediatric conditions.
   10. Vision and hearing disorders
   
   

This is a partial list of the type of req. that the plan must meet.

The challenge is that a lot of high ded. plans do not meet the IRS tests. They might be major med, rather than comprehensive major med plans. I haven't used ehealthinsurance, so I don't know if they make this distinction clear.

I know people who went through your type of situation with just a major med. plan, big deductible, some type of limited coverage. It really depends on what you can afford.

 

[Mulligan]

I purchased my individual HDP with HSA, through ehealthinsurance. The various plans offered will tell you if they are HSA approved or not. I have read through posts here that insurance agents will offer the same price as rates are state regulated, so they might be able to get you into a plan you are comfortable with if you are not the investigative type. If you are interested in an HSA but plan on using it for only a few years, you can consider only funding it If you have an incurred expense and then draw it immediately back out to pay for the cost. You collect the tax deduction the year you fund it, but you wouldn't be able to withdraw until 65 if you don't use it for medically approved expenses. I'm using mine for a savings account to accumulate funds, but I also plan on having one until I'm 65.

 

[dgoldenz]

There are some companies that "share" medical expenses. Medi-share is a Christian organization that does that. I haven't used it, but it seems to work similar to insurance, but at much less cost. We've looked at it because my wife will have, hopefully, 7 or 8 years after I quit working and before she qualifies for medicare. If we can't find a better alternative for me, I may have to pay one of the really high premiums for a few years, but she doesn't have any potentially expensive pre-existing conditions, so hers would be cheap. Check it out.

I believe Medi-share was given a cease and desist order by several state DOI's since they were representing the coverage as an insurance product without filing it as such.

In my opinion as a health insurance agent, HSA plans are the best value and have the lowest out of pocket expense limits for the price. You could max out contributions while you have the HSA plan and if there's any money left after you drop the plan and go to a different one, you can still spend down the HSA funds on healthcare expenses. That way you have a tax deduction for care you would be spending money on out of pocket anyway and it carries forward every year. If there's anything left at age 65, you can use it to pay for Medicare premiums, use partial funds for long term care insurance, or just keep spending it down on prescriptions/office visits/other services until it's gone.