Health Maintenance Organization vs. Health Savings Account - Essay Example

Health Maintenance Organization vs. Health Savings Account In this paper I shall be outlining several points of view regarding the comparable benefits between a Health Maintenance Organization health plan and a Health Savings Account health insurance plan. The former offers a plan that, while easy to comprehend, only provides cover for network provided health care. The latter, meanwhile, is comprised of two parts: the first involves a major health plan that is high deductable while the second part involves a basic savings account.

Contributions to the plan are tax deductible and interest can effectively be accrued whilst the plan operates on a 'roll over' basis. The first point of view we shall look at here is from someone who opted for the Health Savings Account health plan. The individual here was actually in their mid-twenties and decided to take out the HSA plan at this relatively early stage in order to build a suitable sum of money that they could use to cover health costs at a later stage. However, less than a year later they found themselves in a position where the money was needed.

The medical bill they incurred amounted to approximately $2000, however, due to the nature of the plan they were only liable for around 1400 of that. In addition, their employer had thus far contributed $560 and the remaining $840 could be deducted from taxes. Overall the individual only had to pay $168 on top of the annual premium which, given the circumstances, they felt was a good result. Moreover, the individual was impressed by the fact that the money could effectively cover aspects such as prescriptions, glasses and even visits to the dentist.

The second account we shall deal with here also comes down on the side of the HSA plan as far as saving money is concerned. Their main point is how the fact that the contributions to the plan that are deducted from an individual's wages are actually done so at the pre-tax stage. In addition, if the plan is not taken out through an employer an individual can set the contributions as a tax deduction on their 1040 form. Finally, a note is made here that when planning to enter into a health insurance program an individual should ensure the program is 'HSA eligible'.

The third account we have focuses on the pros and cons of each plan whilst offering no particular preference either way. Rather, they state that the most suitable plan will depend on both the circumstances and preferences of each individual. Having outlined the main points of each plan, the writer here comes to the following conclusions regarding the two plans we are discussing here. The HSA type plan, they conclude will probably suit those individuals who are relatively disciplined and good savers.

The HMO plan on the other hand will be better suited to those individuals who are perhaps looking for a more comprehensive plan and who have no problems with allowing their treatment to be carried out by one of the network practitioners (most of whom -- the writer notes -- will be listed in either a book or a website). On a final note, the writer makes the point of encouraging individuals to examine each plan carefully before making the decision to go ahead. The final account we have here is similar to the last in that its intention is not to state a preference one way or another.

This account merely outlines some of the basic points of each plan. The writer here points out that the HMO type plan will, more often than not, have a much lower premium rate than the available alternatives and much lower deductibles will apply (deductibles are payments that have to be made outside of the plan). In addition, they note how this type of plan will generally offer more extensive coverage. On the downside of this option the writer points to the likely negation of any cover should treatment come from a practitioner outside the network.

On the side of the HSA plan, the writer points out the advantages here include having the option of seeking treatment outside the network as well as how this plan has certain tax advantages. As for the disadvantages, the writer points to the high level of deductibles this type of plan generally involves.