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4 Steps to a Complete Health Plan

February 23, 2011

STEP 1 - Switch from low deductible group to high deductible individual Health plan

Because group insurance rates are two to three times as expensive as individual plans, the best option for individuals and small businesses is to sign up for individual coverage, rather than group coverage. The main advantages of this strategy are that individual plans are 100% portable, meaning that they are not tied to the employer's business. The employee can take the coverage with them, if they lose or change jobs. And because they are individually underwritten, they are much less expensive.

You can also lower your health premiums and taxes by switching from a traditional co pay/low deductible plan to a high deductible health plan (HDHP) and depositing the extra money into a Health Savings Account (see STEP 2). In exchange for lower premiums, you agree to pay for all of your medical expenses until your coverage kicks in. You get to choose the amount you pay in premium. The less coverage you choose, the lower your premium will be.

Policies are being marketed via insurance agents for the same price as going to the insurance company direct and HDHP/HSA plans are available for between $62 -$189 per month. The plans also include unlimited wellness/preventive coverage before deductible.

STEP 2 - Switch from IRA/401K to a HSA and add a Accident plan to cover high deductible

A health savings account (HSA) is a tax-favored savings account created for the purpose of paying medical expenses. Contributions to the HSA are deducted 100% (up to the legal limit) ŭ just like an IRA. Better than a IRA, withdrawals to pay qualified medical expenses are never taxed or penalized for early withdraw. HSA Interest earnings accumulate tax-deferred, and if used to pay qualified medical expenses, are also not taxed. Unlike a Flexible Spending Account, unused money in your HSA isn't forfeited at the end of the year; it continues to grow, tax-deferred. An HSA works in conjunction with HDHP. Your HSA money can be used to help pay qualified medical expenses not covered by the health plan, including trips to the dentist and optometrist. To open a Health Savings Account (HSA), visit

Accidents are the leading cause of death for Americans under the age of 40, and the 5th leading cause for people of all ages. Over 52% of all medical costs are due to accidents. There are no health questions and no underwriting. Accident coverage can be used at any office, urgent care facility, medical clinic or hospital. There is no limit on useŭthe coverage is up to $5,000 per occurrence ($100 per occurrence co pay applies). Accident coverage is an important benefit that should be included with a HDHP. To apply for a $22 single or $35 family Accident Plan visit
STEP 3 - Purchase Long-Term Care and pay premiums tax-free from HSA

It is estimated that 60% of people, 65 or older will need long term care during their lives - either at home or in a facility, costing as much as $8,000 per month. Medicare or your health plan won't cover it, and you must be impoverished to qualify for Medicaid coverage. Long term care insurance helps you protect your retirement savings and your family assets. It provides peace of mind. Premiums are based on your age and health. Locking in now means lower fixed premiums. The policy, which typically costs $25 to $100 per month, is discounted if your spouse also enrolls or you purchase through a group, and can be paid tax-free from your HSA. 

STEP 4 - Purchase Medicare Supplement - At age 65 (or 24th month of a disability)

Medicare A & B covers about 80% of all doctor and hospital bills after age 65. The remaining 20% can be avoided by purchasing a Medicare Advantage or Medigap plan. The cost is typically from $0 to $300 per month and cannot be canceled or increased based on claims history. Anyone choosing a medigap policy should also enroll in a Prescription Drug plan, especially because the cost is permanently increased for each month you delay. The premium for Part D plans is typically between $20 and $50 per month. You must have Medicare Parts A and B to enroll.