HSA (health savings account) Plans vs Copay Plans

For most people who purchase individual health insurance, the big decision will be whether to get a Copay Plan or to get an HSA (Health Savings Account) Plan. Both have advantages. Which of these plan types will work best for you depends on your situation. An HSA plan is more attractive to people who normally don’t take prescriptions or need to go to the doctor often. For those who like the security of knowing they have coverage for doctor’s office visits and prescriptions prior to meeting their deductible, a Copay plan will work the best.

HSA (Health Savings Account) Plans:

HSA plans are also called HDHP (High Deductible Health Plans) allow you to deposit earnings into a qualified HSA Savings Account to be used for out of pocket medical expenses. You can have your earnings deducted prior to withholdings taken out of your income, or you can deduct the deposits from your income while filing your tax returns 

100% Preventative Coverage: As with all major medical plans that are compliant with the new health care reform law, HSA plans issued after 1023/2010 offer 100% coverage for all preventative office visits and preventative tests.

 

HSA Plan Structure: Besides preventative coverage you are responsible for all medical expenses you incur prior to meeting your deductible. After your deductible is met you will have the choice of coinsurance levels such as 70%, 80%, and 100%. This means after the deductible is met if you have 80% coinsurance, the insurance provider will pay 80% and you will pay 20% of medical expenses incurred up to a specified limit. If you have 100% coinsurance, medical expenses are covered 100% after your deductible is met. On HSA plans I always recommend getting 100% coverage after your deductible is met.

HSA Minimum Deductibles: In order for a plan to qualify as HSA eligible it must be considered a High Deductible Health Plan (HDHP). For individuals the deductible must be at least $1,100 for family’s $2,200. Also HSA plans usually have one deductible per family. Thus offering much lower out of pocket liability than Copay Plans.

What do HSA Plans pay for after you’re Out of Pocket Maximum is met? The total of your deductible and the maximum amount of coinsurance is called your Out of Pocket (OOP) maximum. Your OOP maximum can vary greatly, so if you choose a plan with coinsurance make sure you know how much your OOP is. Once your out of pocket is met, most HSA plans cover medical expenses 100% with no copay obligation for prescriptions and doctor’s office visits. This means you actually have better coverage than Copay Plans after your deductible is met because they usually require you still pay the copays even after your out of pocket maximum is met.

HSA Advantages:

1. Lower Premiums

2. Tax Free Deposits into a qualified HSA Bank Account

3. Lower Out of Pocket Maximums- Unlike copay plan most with most HSA plans the deductible usually only needs to be met once per family.

4. No Copays for Doctor’s Office Visits and Prescriptions after your deductible has been met.

Is an HSA Plan right for you? HSA plans are most popular with those who in a typical year do not have many medical expenses, and who like the tax advantages HSA plans offer.

Copay Health Insurance Plans

The other major category of individual major medical insurance plans is commonly referred to as Copay Plans. These plans cover doctor’s office visits and prescriptions with a copay benefit before your deductible needs to be met. All of the top individual health insurance carriers offer plans with copay benefits. Each carrier structures their copay benefits differently, so is important to understand how each of the carriers copay benefits works in order to make the best choice.

Copay Benefits: As mentioned before the exact copay benefit plan structure varies from carrier to carrier. What all Copay Plans have in common is that they offer coverage for problematic doctor’s office visits and prescriptions prior to meeting your deductible. A common copay plan structure for individual plans will cover problematic doctor’s office visits is $35-$50 for each visit. Prescription drug copay benefits usually are structured according to tiers levels. For example prescriptions drugs are categorized in Tiers 1-4, with Tier 1 consisting of common generic and low cost name brand drugs. Tiers 2-4 are usually are name brand and more expensive medications. Each tier has a different copay obligation, with Tier 1 being the least expensive and Tier 4 being the most expensive.

Copay Plan Deductibles and Co-Insurance: Copay plans offer many different choices for deductibles and co-insurance, ranging from $500 deductible with no co-insurance to $10,000 with 70% co-insurance. If you choose a plan with co-insurance liability (e.g. 80% or 70% co-insurance) make sure to find out the total out of pocket maximum of the co-insurance obligation.

Unlike HSA plans with most Copay Plans the family deductible is two to three times the individual deductible. For example a plan with a $2,500 deductible needs to be met two times per family by two or more family members. This means each individual in the family has a $2,500 deductible with the maximum deductibles being 2 per family.

100 Preventative Coverage: As with all major medical plans that are compliant with the new health care reform law, Copy plans issued after 1023/2010 offer 100% coverage for all preventative office visits and preventative tests.

Copay Plan Advantages:

1. Problematic doctor’s office visits coverage prior to meeting your deductible

2. Prescription drug coverage prior to meeting your deductible.

Which plan is right for you HSA vs Copay

There is no right or wrong when it comes to deciding which plan structure is better. It comes down personal preferences. Knowing the basic benefit and coverage structure of each plan will help you decide which works better for you. The other things to measure in your decision will be price, deductible, and out of pocket maximum.

Make sure you use a Network Provider

With both HSA and Copay plans it is important that you utilize network providers for all covered services besides emergency care. Your out of pocket liability will be much higher if you don’t utilize network providers for all care other than emergency services.