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How a Health Savings Account Reduces Medical Costs

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Since 2003, the health savings account (HSA) has supplemented your health insurance. It's a product that's designed to reduce your medical costs in several important ways.  

Supplement Your High-Deductible Health Insurance Policy

Many employers only offer high-deductible or catastrophic health insurance plans because the premiums are low. With these plans, your deductibles could be as high as $1,250 for individuals or $2,500 for families.

If you have this type of health insurance, add an HSA to your portfolio. The money in this account can be used for a variety of approved medical expenses. You'll pay lower premiums and save money that pays for your deductible and other costs associated with your medical care.

Pay for Medical Expenses

In any given year, you may incur multiple medical expenses. Your HSA funds can pay those costs if they're incurred after you set up your HSA and if they are associated with diagnosing, curing, preventing or mitigating an illness or disease. Acupuncture, medication and co-pays are three examples of covered expenses, but you can't use your HSA funds to pay for cosmetic surgery, cosmetics or grooming products or other items that you may use for your general well-being.

Reduce Your Tax Liabilities

No matter how much you usually owe on your annual tax return, an HSA can reduce your liability. You can use the money you save to boost your HSA savings or cover other expenses.

Many HSA owners elect to have money deposited directly to your account from every paycheck. That money is deducted before you pay taxes on it, and you won't pay taxes on any of the money you take out of your HSA as long as you use it for approved medical expenses. This makes an HSA a valuable asset since it limits your tax liabilities. For more information on your tax savings, talk to your financial advisor.

Accumulate HSA Funds

There are other accounts that help you pay for medical expenses and reduce your tax liability. One is the flexible spending account (FSA) that you can use to pay medical or child care expenses during the calendar year, but remember that if you don't use the money in your FSA, you forfeit it.

The funds you contribute to your HSA don't expire, and they can move with you when you switch employers. That means you may use what you can this year and save any unused amount for next year when your medical costs may be higher than they are this year.  .

An HSA helps you reduce your medical expenses as it supplements your high-deductible health insurance plan. Discuss your options with your Human Resources Department or insurance agent as you save money.


How to Increase Your Life Insurance Coverage

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When you first purchased your life insurance policy, you chose a policy amount that worked at the time. However, your life circumstances and needs may have changed. Here's how you can increase your life insurance coverage.

Figure Out the Increase You Need

Marriage, children, a house and a new job all affect the amount of life insurance you need. Perform a needs analysis with your insurance agent as you determine exactly how much of a life insurance increase you need. It includes a list of categories that walks you through your financial needs and helps you determine the amount of coverage you need to cover final expenses, provide financial support for your family and repay debt.

Add Coverage to Your Employer-Sponsored Policy

Many employers offer free life insurance to employees. Ask your Human Resources manager if you can boost your policy value. Since you already hold a policy, you may not need to fill out additional paperwork or take a medical exam to get more coverage.

Increase Coverage on Your Personal Policy

Because employer-sponsored life insurance policies are often small, you may have purchased a personal policy through a commercial carrier. Contact the agent about increasing your policy amount. You may need to pay a fee for additional coverage, but the peace of mind is worth the investment.

Purchase Another Policy

A second life insurance policy may provide the additional coverage you need. It covers the gap between the coverage you already have and the amount you need. Purchase a second policy from a different carrier than your original policy. While you have to disclose that you already own life insurance, you will have additional coverage for your family and needs.

Things to Consider

When you want to increase your life insurance, remember three tips.

  1. Research your options. No matter what type of coverage you currently own, a term, whole life, universal, indexed or variable policy may be best the best type for your needs now. Remember to compare policies from different companies, too, as you get the most coverage for your money.

  2. Check your budget. Because your policy will lapse if you don't pay the premiums, be sure you can afford the extra insurance costs.

  3. Prepare for the underwriting process. Potential insurance companies will ask for details about your health, finances, occupation and other factors. These factors affect your life expectancy and insurability, so always tell the truth as you prepare to answer these questions.

You can add coverage to your existing life insurance policy in several ways. Talk to your agent as you purchase the right coverage for your needs.


Understand Your Health Insurance Deductible

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When shopping for health insurance, you probably noticed that different plans feature different deductibles. Understand what your health insurance deductible is as you maximize your health insurance coverage.

What Is a Health Insurance Deductible?

In basic terms, a deductible is the fixed amount you must pay toward your medical bills before your insurance coverage kicks in and begins to pay your expenses in full. Your specific deductible can be as low as $250 or as high as several thousand dollars and starts over again at zero on January 1 of each year.

How Does the Deductible Work?

Here is an example of how your deductible works using a $1,000 deductible amount.  

In February, you get the flu. You pay $200, the full amount, for the doctor visit and medication. Your deductible balance now totals $800.

In May, you sprain your ankle. You total costs are $500 for the doctor visit, x-rays and brace. Your deductible balance is now $300.

In August, you need a physical. You pay $300 for the doctor visit and blood work. Your deductible is now met. Any further doctor visits or health care needs that are covered by your insurance will be paid 100 percent.

What are the Different Types of Deductibles?

You can check your health insurance benefits package to see exactly what deductibles you may need to pay. Some common types include:

  • Annual: It's the amount of money you'll pay annually from January 1 to December 31.
  • Per Episode: Your deductible may vary based on the type of medical care you need. As an example, doctor visits may include a $25 deductible while hospital visits require a $1,000 deductible.
  • Out-Of-Network: Visit a doctor, specialist or hospital that's not in your network, and you'll pay higher deductibles.
  • Family: If you have family coverage, your deductible may be higher than the amount paid by individuals. When your family deductible is met, your insurance will pay your health care costs.

When Won’t You Pay a Deductible?

Some insurance plans allow you to receive three types of services and not pay a deductible. They include visits to an in-network doctor for preventative care, yearly screenings or your annual flu shot. Check your benefits package to verify that you won't owe a deductible for these services.

What Services Don’t Count Toward the Deductible?

Even though you haven't met your deductible, there are some health services you may need or want that don't count toward meeting your deductible. These services are the ones your insurance won't pay.

Your health insurance deductible is an important part of your medical care. Understand it as you maximize your health care coverage and take care of your health.


What Does it Cost to Replace Your Spouse?

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Your spouse is priceless to you as a life partner, friend and confidante. Have you ever calculated the actual worth of your spouse? Take time to figure out how much it would cost to replace your spouse as you purchase invaluable life insurance for the person you love the most.

Replace Salary

Most life insurance agents recommend that you purchase enough life insurance to replace eight years of annual salary. You can find the recommended figure by checking your annual W-2s from the last several years.

If your spouse does not work outside the home, you should still purchase life insurance. According to Salary.com, the average stay-at-home parent works at least 94 hours per week for a total salary of approximately $113,600. A working parent's at-home salary is close to $67,400. Compare these figures to what the average physician earns - $153,000 for a 56-hour work week - and you see that you must find a way to pay for all the services your spouse provided whether or not he or she worked outside of the home.

Provide for Children

Losing a parent is tough for a child. Life insurance isn't a parental replacement, but it can provide financially for your children's living expenses. Use the money to pay for child care, before and after school care, shuttle service and meal prep as well as expenses required to care for your child with special needs.

If your kids are older, you may use the money to fund their college education. You could also establish a trust as you provide for your children into the future.

Cover Housekeeping

Because your spouse performed a share of the housework, prepare to cover the jobs he or she did. Those duties could include cooking, cleaning, laundry, landscaping and home maintenance. Life insurance funds could pay someone to do these chores indefinitely.

Repay Debt

Life insurance can be used to repay debt you and your spouse have accumulated. By repaying debts such as your mortgage, vehicles, student loans and credit cards, you gain a bit of wiggle room in your budget and can take time to grieve instead of worrying about working overtime.

Pay Final Expenses

The average funeral can cost as much as $10,000. Pay this expense with your spouse's life insurance policy. It can cover probate costs, medical bills or other end of life expenses, too. With adequate life insurance, your family budget will not suffer as you pay for your spouse's final expenses.

As you can see, life insurance for your spouse is a valuable investment. It provides financial resources for you and your family when you need it most. Talk to your insurance agent to ensure you purchase adequate coverage today.