The Frugal Pig

Do You Have Health Insurance?

The lack of health insurance does not just give some people a social stigma, especially at the doctor’s office, but can cause a medical or financial crisis. If you follow the news at all, you know that almost 50 million Americans lack health insurance. Many more do not have very good health insurance. And twice that many, or almost 100 million Americans, lack dental coverage!

Why Buy Health Insurance?

The reason people should buy medical insurance is to protect themselves from a catastrophe, and not to pay the bill every time they need a band-aid. This may sound trite, but people do not get this. When you buy car insurance, for instance, you do not expect it to cover every tank of gas or oil change. If your car insurance did this, it would be very expensive.

And yet, Americans who need individual health insurance, seem to think their health plan should cover 100% of every doctor’s office visit. Well, a totally comprehensive health plan like that would cost a lot, indeed!

Is an HSA For You?

Of course, more coverage is better, but let’s be realistic. Look at HSA (Health Savings Account) medical plans that work with high deductible major medical plans. The HSA is an interest earning account, and contributions earn tax deductions. The money in the account can be used for a variety of medical care (including dental, prescriptions, glasses, etc.) that are not even covered by most health insurance policies. Plus, any unused money rolls over, and can be withdrawn at retirement age.

Because the associated medical coverage has a fairly high deductible, it will be less expensive. The extra money, that does not go into premiums, can be saved in the HSA (Health Savings Account) to get a tax break and earn interest. The IRS does limit the amount of yearly contributions that can be deducted. So if you find you have more money than that left over, why not save it in your regular IRA or other savings account or investment?

Now HSA plans and high deductible savings accounts will not solve everybody’s problems, and I am, in fact, hoping for a national health care plan. But until that happens, find out if an HSA plan can help you.

If you are still confused about your health insurance choices, see PPO vs HSA vs HMO Medical Plans.

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