Comparing HSA and PPO Arizona Health Insurance Plans

Health savings accounts (HSAs) continue to have appeal for consumers who are looking to combine health insurance with a savings account that has  tax and savings benefits. Money deposited into the account (a maximum of $3100 for an individual  and $6250 for a family per calendar year 2012, up slightly from the previous year ) is tax deferred, tax deductible and generates income while in the account.  The money can be withdrawn to pay medical, dental and vision expenses without any tax penalty. It cannot be used to pay the monthly premiums, however, without being considered income.

The HSAs grew out off the Archer Medical Savings (MSA) plans which were aimed only people who were self-employed and had other restrictions on them. They were heavily pushed by President George W. Bush as part of his health reform initiative.

When comparing HSAs to preferred provider organization-type plan (PPOs), which is the more standard type of insurance, a couple of differences emerge.  In general the HSAs are leaner plans in terms of benefits and have higher deductibles. While many PPOs have a fixed office visit co-pay (you know you will pay $30 to see a general practitioner who may charge two or three times that to the man who walks in off the street), usually with the HSAs you have to meet the deductible before the plan pays anything (with most plans "wellness" visits and immunizations, however, are covered at no charge, much like the PPOs). Many families with small children seem more comfortable with a PPO, because they know what a doctor's visit for, say, strep throat is going to cost up front. 

The two types of plans handle the deductible differently for families. HSAs have one family deductible that applies to everyone in the family. If in a family of four under a plan with a $4000 deductible has a member who incurs $4000 in medical expenses, then the whole family has met the deductible for the year, no matter how many family members there are.  If two members incur $1500 in expenses, and a third member incurs $1000, again the family has incurred expenses for everyone.

Non-HSA plans handle the deductible differently.  Either two or three people (depending on the plan) have to meet the deductible individually, before everyone else on the plan is covered. The medical expenses they incur are applied only to their part of the deductible. Once the deductible has been met, then the family members are only responsible for the co-pay for their expenses, up to a maximum co-pay amount. With some HSAs, once the deductible has been met, then the insurance pays 100 percent on such expenses on in-patient care and the prescription benefit, but nothing before that.  Because of the way the deductible is set up, the expenses that the consumer pays directly are more expensive than with a typical PPO, because he or she is paying everything out of pocket before the deductible is met.

At the end of the day, you're the one has to decide if the attractions of the HAS,  with its relatively higher deductibles and leaner benefits, balancing out not having the option of the office and prescription benefit.