Health Care Costs Rising? Get a Health Savings Account
January 13, 2015
What is happening to health care costs? According to a new report from the Commonwealth Fund, premium increases are slowing, although premiums themselves are still rising. Moreover, out-of-pocket costs are up.
Kara Brandeisky of Time.com reports on the numbers:
- A decade ago, out-of-pocket health care costs (the costs covered by the individual -- basically, premiums plus deductibles) were 5.3 percent of median income. Today, they are 9.6 percent of income.
- Premiums increased 4.1 percent annually from 2010 to 2013. While this is slower than the 5.1 percent annual increase from 2003 to 2010, it is faster than incomes, which have grown at just 1.2 percent annually from 2003 to 2013.
- Since 2003, individual deductible costs have doubled, and employers are requiring employees to cover more of their health insurance costs.
What should a health insurance consumer do? Brandeisky encourages consumers to purchase high-deductible plans with health savings accounts. High-deductible plans carry lower premiums, so individuals who are healthy and visit the doctor infrequently can benefit from them. As for health savings accounts (HSAs), they allow Americans to deposit pre-tax income into savings accounts that can be used to cover medical expenses. Funds roll over year to year, and putting individuals in control of their health dollars encourages consumers to limit their spending.
Source: Kara Brandeisky, "The Good News and the Bad News About Health Care Costs," Time.com, January 9, 2015.
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