Indianapolis Health Insurance
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National Health Care Reform:
Being extensively litigated
To be fully implemented 2014
Premiums WILL increase
$88,000 / year or less get tax credits
Establishes Health Insurance Exchanges
Fined or imprisonment for no coverage!
How much should you be saving on Health Insurance?
Indianapolis Health Savings Accounts
What is an HSA or health savings account?
  • An HSA is a individual medical savings account in your name that enables you to set aside money for possible health related expenses. It is commonly used with high-deductible health plans by allowing the use of pre-tax dollars in the payment of medical expenses. Unused monies in your account accumulate and are never lost.
  • Eligible health related expenses which may be paid from the HSA account are doctor's visits, prescriptions, dental, and vision expenses. Your HSA can also bear interest.
  • An HSA can only be established in conjunction with other health plans.
  • Individuals who are enrolled in Medicare, who can be claimed as a dependent on another person's tax return, or who have received VA benefits within the previous three months are not eligible to¬†contribute to¬†an HSA.

If you are sick in Indiana, read our uninsurable alternatives page.

Why choose an HSA - health savings account?
  1. You pay lower medical insurance premiums since you can enroll in a high deductible plan.
  2. HSAs provide tax savings three ways - pre-tax contributions through payroll deduction, tax-free earnings (interest) and tax-free withdrawals for qualified medical expenses. Unlike other savings or retirement investment vehicles, if used for approved medical expenses, you will not pay tax on the money spent from your account.
  3. You decide how much money to contribute, which medical expenses to pay and can save the money for future or current expenses.

Two pieces of the legislation that impact HSAs both take effect on January 1, 2011:

  1. The definition of an HSA eligible qualified medical expense will no longer include over-the-counter drugs unless prescribed by a doctor.
  2. The tax penalty on withdrawals from an HSA that are not used for qualified health care expenses will increase from 10% to 20%.

Health Savings Accounts (HSAs), make sense!

In Indiana's HSA, the state deposits $2,750 per year into an account controlled by the employee, out of which he pays all his health bills. Indiana pays the premium for the plan. The intent is that participants will become more cost-conscious and careful about overpayment or overutilization.

Unused funds in the account are the owner's permanent property. For the very small number of employees (about 6% last year) who use their entire account balance, the state shares further health costs up to an out-of-pocket maximum of $8,000, after which the employee is completely protected.

The HSA option has proven highly popular. This year, over 70% of the 30,000 Indiana state workers chose it, by far the highest in public-sector America. Due to the rejection of these plans by government unions, the average use of HSAs in the public sector across the country is just 2%.

Individually owned and directed HSAa have a positive effect on costs for both employees and Indiana. Employees enrolled in the consumer directed plans save more than $8 million in 2010 compared to their coworkers in the previous preferred provider organization (PPO). Indiana State workers switching to the HSA are adding thousands of dollars to their take-home pay. Even employee with health issues and spending the maximum out-of-pocket expenses, would still be hundreds ahead. HSA customers seem highly satisfied; only 3% have opted to switch back to the PPO.

Indiana will save at least $20 million in 2010 because of high HSA enrollment. Indiana's total health care costs are being reduced by 11% because of the HSA option.

In 2009 Indiana state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with PPOs and HMOs. They were much more likely to use generic drugs, resulting in an average lower cost per prescription of $18. They were admitted to hospitals less than half as frequently as their colleagues. Differences in health status between the groups account for part of this disparity, but consumer decision-making is, we've found, also a major factor.

Overall, participants in the Indiana State HSA plan ran up only $65 in cost for every $100 incurred by their associates under the old coverage. HSA participants do not deny themselves needed care in order to save money. There is no evidence HSA members are more likely to defer needed care or common-sense preventive measures such as routine physicals or mammograms.

It turns out that, when someone is spending his own money alone for routine expenses, he is far more likely to ask the questions he would ask if purchasing any other good or service: "Is there a generic version of that drug?" "Didn't I take that same test just recently?" "Where can I get the colonoscopy at the best price?"

By contrast, the prevalent model of health plans in this country in effect signals individuals they can buy health care on someone else's credit card. A fast-food meal costs most Americans more out of pocket than a visit to the doctor. What seems free will always be overconsumed, compared to the choices a normal consumer would make. Hence our plan's immense savings.

The Indiana experience confirms what common sense already tells us: A system built on "cost-plus" reimbursement (i.e., the more a physician does, the more he or she gets paid) coupled with "free" to the purchaser consumption, is a machine perfectly designed to overconsume and overspend. It will never be controlled by top-down balloon-squeezing by insurance companies or the government. There will be no meaningful cost control until we are all cost controllers in our own right.

Americans can make sound, thrifty decisions about their own health. If national policy trusted and encouraged them to do so, our skyrocketing health-care costs would decelerate

Source: State of Indiana and Mercer Consulting