Editor's note: Having an optimal health care plan can give your finances a boost... But choosing a health care plan is a scary process for some people. There are so many options that it can be difficult to figure out which one works best for you. And as Income Intelligence editor Dr. David "Doc" Eifrig believes, leaving your health in someone else's hands isn't a good idea. But once you cut through the confusion, you can find a plan that not only maximizes your medical care, but your finances as well... In today's Masters Series, adapted from the May 9, 2019 issue of Doc's free Health & Wealth Bulletin e-letter, he describes various health care plans... details the pros and cons of each one... and explains how you can use them to earn money...
How to Profit From Your Health Care Plan By Dr. David Eifrig, editor, Income Intelligence The average American household spends more than $800 a month on health insurance. A recent report from the Commonwealth Fund found that workers in 37 states spend 10% or more of their earnings on health insurance. And premium contributions and deductibles totaled nearly 12% of median income in 2020, up from 9% in 2010. The rising costs of coverage have pushed people to choose health care plans with even higher deductibles to save on the monthly cost. According to the Centers for Disease Control and Prevention, around 40% of Americans have a high-deductible health plan ("HDHP"). But if you have a medical emergency, you could be on the line for $1,000 or more in costs before you meet your deductible. So today, I'll explain how to put aside money for emergencies and take advantage of a loophole that allows you to profit from your health care plan. HDHPs are one of three main health insurance plans. The other two are health maintenance organizations ("HMOs") and preferred provider organizations ("PPOs"). HMOs offer local plans that focus on in-network providers. That means they have specific doctors, specialists, and hospitals they work with. They've worked with the insurance plan to offer reduced rates in exchange for getting more patients through the insurance company. PPOs have a wider net for providers and allow out-of-network doctors, though in-network doctors have better rates and lower payments. Generally, HMOs and PPOs offer low deductibles. That's the amount you're responsible for paying before your insurance kicks in. Then there are HDHPs. These work by offering low baseline coverage. They're ideal for folks who don't need a lot of tests and procedures every year. HDHPs are often the cheapest choice when it comes to health care plans, saving you on monthly costs for coverage. So it's no wonder that nearly 40% of Americans choose HDHPs to save money on health insurance. But these plans come with high deductibles and greater out-of-pocket expenses... The deductible minimum for individuals this year is $1,400. And for a family plan, it's $2,800. Similarly, the maximum out-of-pocket expense for an individual is $7,050. For a family, it's $14,100. There are two ways to help cover these costs – a flexible spending account ("FSA") or a health savings account ("HSA")... FSAs and HSAs are both types of accounts that allow you to put away money, often pretax, to pay for medical expenses later. Qualified expenses include things like eye exams, prescription medications, and dental treatment. Here's a rundown of the main characteristics of HSAs and FSAs... 
Some employers offer you a choice between the two when you have an HDHP. So which one should you choose? The hands-down choice is an HSA. The biggest downside with an FSA is that if you don't use all your money by the end of the year, you lose it. With an HSA, you can roll over an unlimited amount of money each year. And best of all, it serves as a great tax shelter... The IRS allows you to use your HSA like a garden-variety IRA. You can just keep putting money in it until age 65. Once you hit 65, you can withdraw the money without penalty for any expense... You'll just have to pay taxes if it's nonmedical. Another benefit is investing through your HSA. The money in your HSA grows tax-free. That means the capital gains, interest, and dividends in your account are nontaxable. Remember, your contributions are either pretax or tax deductible. And you can make tax-free withdrawals for qualified medical expenses. That means you're saving on taxes three times over. As long as you have an HDHP, you're under the age of 65, and you're not on Medicare, a dependent on someone else's tax return, or covered by a non-HDHP plan, you can sign up for an HSA. Setting up an HSA is simple. Some employers or health insurance companies might have a recommended bank to open your account. But you can also check with the bank of your choosing, credit unions, or brokers. If you have a high-deductible health plan and you're not using an HSA to your advantage, get started today. Here's to our health, wealth, and a great retirement, Dr. David Eifrig
Editor's note: Doc says the health care industry is undergoing huge changes that few people are paying attention to and even fewer understand... That's why he recently held a presentation to detail this transformation. He believes we could get in at the beginning of a massive technological breakthrough. But if you're not paying attention, you could miss out on a chance to improve your finances – and your overall health. If you missed this must-see presentation, click here to watch the replay before it goes offline.
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