Aug

But What do you do for Health Insurance?

R on August 10th, 2008

I think I’ll start right off by addressing the most commonly asked question. Health insurance is a huge issue faced by the self-employed, unemployed, and early retirees. There’s so much to be said on this topic, and I will cover much of what I learned in the coming weeks. For today, I want to talk a little about Health Savings Accounts.

Before I started seriously preparing for early retirement, I’d never even heard of HSAs. For many people, they are a really good option for individual health insurance, and yet they are still little known to the general public. For starters, they are not available to people who are covered by employer-sponsored plans. However, for the categories of folks who aren’t otherwise covered, they are essentially high-deductible individual health insurance plans that are attached to a tax-deductible savings account. The savings account funds are available to pay for deductibles and copays, but not the insurance premium. The total dollar amount you can contribute and deduct is limited by federal regulations, and depends on how many people are covered by the plan. In 2007, an individual with self-only coverage could contribute up to $2850 into their HSA account.

Note that you must select an insurance policy that is specifically designated as HSA-eligible. The best thing to do is search online for policies and look for those that are HSA-eligible. One such website is eHealthInsurance. This will start to give you an idea of types of policies and premiums available with an HSA option.

So, what did *I* do for health insurance? Yep, that’s right, I opened an HSA and have an HSA-eligible individual health insurance policy. I elected a policy with a $2500 deductible - of course I hope not to need to spend that much in any year, but I have my HSA funds available if I do.