#024- Traditional PPO vs. High Deductible Health Plan With Health Savings Account answers the question posed by an anticipated Dad to be.  Is it better to switch from a high deductible health plan (HDHP) with Health Savings Account (HSA) to a traditional PPO plan due to a possible family addition?  Listen in to what Scott has to say!

Most people do not understand how Health Savings Accounts work, nor how they help you save REAL money.

Would you light a match to a dollar bill?  Then why are you not using a Health Savings Account?  Because lighting a match to your money is what you do when you enroll in a traditional health plan.

Learn the rules for Health Savings Accounts

Traditional PPO vs. High Deductible Health Plan With Health Savings Account highlights some easy to understand but often misunderstood concepts.

• Eligible High Deductible Health Plans can have a deductible as low as $1,400
• Anyone can contribute to your Health Savings Account – not just you
• You are not required to use the HSA provider through you employer
• You are not required to contribute only through payroll deduction
• You can contribute a lump sum to your HSA at anytime during the year 
• Not all HSA providers allow for funds to be invested or offer limited options
• Many HSA  providers charge you a fee –  choose one that is free!

Scott prefers Lively HSA – it is FREE, ONLINE with FULL INVESTMENT options

To calculate the amount you save on every dollar you spend with a Health Savings Account, divide 1 by 1 minus your tax rate  or  1 / (1 – Your Tax Rate) 

For the 22% bracket the calculation would be

1 / (1 – .22)  or  1 / .78 = 1.28

Rather than  earning $1.28, paying Uncle Sam tax at 22% of $1.28 or 28 cents and having $1.00 left to pay the doctor or hospital,

Using a Health Savings Account, you earn $1.28, pay Uncle Sam 0% tax on $1.28 or NOTHING and have $1.00 left to pay the doctor or hospital and STILL HAVE 28 CENTS IN YOUR POCKET TO SAVE AND INVEST UNTIL WELL AFTER RETIREMENT!

Learn your Federal Income Tax Rate here

As always, I appreciate you!  Tell your family, friends, co-workers, boss and firm administrator to listen to Doxcost!

In the next episode, we’ll cover all the things you don’t know about HMOs, PPOs and EPOs.   See ya then!