Insurance Blog

A health savings account or HSA is maybe something new to some of us. This is also known as the Medical Savings Account for international users and is a great way to save some amount of money on medical and health insurance cost as it offers some helpful solution in controlling the high price of health insurance by paying less on your medical insurance and saving some money for your medical expenses. Allowing you to save much on your health care expenses in so many ways, health savings account is available to all taxpayers in the United States that are enrolled in a High Deductible Health Plan or HDHP.

One must keep in mind that a Health Savings Account is a one of a kind savings account that is tax-sheltered because at the time of deposit, the funds contributed to the said account is not subject to federal income tax. As a component of consumer driven health care, health savings account is unlike a flexible spending account wherein funds roll over and accumulate each year if not spent. With health savings account, a certain individual that differentiates them from a Health Reimbursement Arrangement owned by a company owns funds. The Health savings Account funds are used to pay for a qualified medical expense without any federal tax liability at any time.

Withdrawals made for non-medical expenses are treated the same as those in an IRA, wherein tax advantages are provided if take after retirement age. However, if taken earlier, penalties can be incurred.

One of the many ways that HSA can help you in your health insurance is when one have availed or enrolled in those with higher deductible, as HSA works hand in hand with these types of health insurance plans to help one save on medical expenses.

If you wonder, how this helpful medical saving HAS come into fruition, it was developed in replacement of the Medical Savings Account system. Signed by President George W. Bush on December 8, 2003, the HSA is a part of the Medicare Prescription Drug, Improvement, and Modernization Act.

How does the HSA work? It is way simple and easy to understand. Anyone like other person, the employer or the policyholder of an HSA-eligible high-deductible health plan itself ca deposit to an HSA. Any contributions made by the employer or employee can be made on a pre-tax basis through an employer. However, if this option is not available through an employer, post-tax basis for the contribution made is applied. The self-employed must note though that they are going to pay self-employment tax on their contributions.

All of the deposits made into an HSA will become the policyholder’s property regardless of its source. Deposited funds that are not used in the current year will be carried over to the next year. If ever the policyholder decided to end his or her HAS-eligible insurance coverage, he or she will immediately loose the eligibility to deposit funds. However, those funds that are already in the HAS will still be available for use.

HMO is a common word to every company. Many of us might ask what this three-letter word means. For the benefit of those who are still in confusion, HMO or the Health Maintenance Organizations are companies that take the responsibility in providing insurance for a large group of people, basically an employer group and people who have HMO health insurance obtained from their respective companies.

The insurance provided can be fulfilled to hospitals, doctors, and other practitioners and providers where the HOMO has a contract. With HMO, what is covered are those rendered services by providers who agreed to provide service to patience in accordance with the HMO’s restrictions and guidelines.

Majority of the HMOs require its members to select a primary care physician or PCP who will take charge of the medical services. Generally, PCPs are internists, pediatricians, family doctors, or general practitioners. In case of medical emergency, as long as according to HMO guidelines, patients are required to seek referral from the PCP for her or him to see a specialist or other provider.

HMOs also normally provide preventive care for a cheaper or affordable copayment or even for free to keep their member from developing a preventable condition, thus saving them from a possible great deal of services.

What are normally not covered with HMOs are preventive medical services like immunizations, well-baby checkups, mammograms, or physical exams. Other services that are not covered by HMO include services like outpatient mental health care or any costly form of care, treatment, or diagnosis. Other services that are almost never covered include those services that are not medically required like elective plastic surgery.

HMOs also do the case management to those patients with catastrophic cases identified and to those who have certain chronic diseases including asthma, diabetes, or cancer to make sure that the patient receives the appropriate treatment that he or she needs to prevent the condition from worsening and to make sure that no two service provider provide an overlapping care.

HMO comes in three different models or types, which include the staff model, group model, and the network model.

The staff model has physicians that are paid by and hold office in HMO buildings. Thus, these physicians are direct employees of the HMOs and all contracted to serve only HMO patients.

The group model on the other hand is a type of HMO that does not employ any physicians directly but do have contracts with a multi-specialty physician group practice who are then employing the individual physicians. The contracted group practice can be established by the HMO and will serve HMO patients only. On the other hand, HMOs may also contract with an existing independent group practice and will continue to serve non-HMO patients. This case made the group model HMOs considered to be closed panel for it requires the doctors to be members of the group practice to participate in the HMO. However, physicians may also contact independent practice associations that contracts with the HMO and continue to serve non-HMO patients. This case is an open panel HMO.

The third type is the network model wherein HMO will contract a combination of groups, IPAS, and individual providers.