Consider a Health Savings Account, If you Have a High-Deductible Health Insurance Plan

With the change in the lifestyle of people and increased rate of diseases, every individual is prone to health issues. Healthcare expenses and medical cost has increased to such an extent that the low sum insured is not enough to meet all the treatment and healthcare cost. Individuals need to increase their coverage and it can be enhanced through a high deductible health insurance plan which will ensure higher sum assured at affordable premiums.

A health savings account is a savings plan which is tax-deductible and allows the individual to keep aside pre-tax money for expenses of healthcare in future. However, the concept of Health Savings Account is in the US and there is no such feature available in India.

High Deductible Health Insurance Plan

A health insurance plan with a high deductible will pay the claim amount exceeding the deductible limit. High deductible Health Insurance plans are top-up health insurance plans to cover hospitalisation expenses and are cost-effective. These top-up health insurance or high deductible health insurance plans acts as an add-on cover and enhance your insurance coverage. In the event of the claim of the plan, the insured will bear the amount equal to deductible limit and the remaining amount which is over and above the deductible limit will be paid by the top-up health insurance plan.

If you have a high deductible health insurance plan, then you are required to arrange for the amount up to deductible amount so as to meet the expense in the event of a claim as the top-up health insurance plan will pay the claim beyond the deductible limit. You can either save such amount up to the deductible limit in a bank account or in a form of investment and year mark it as a health savings plan or buy a health insurance plan with the sum assured which is equal to the deductible limit of the top-up health insurance plan. Let’s understand with an example:

Example – If you have a high deductible top-up plan of Rs 6 Lakh and it has a deductible limit of Rs 3 lakh then at the event of a claim of Rs 3 lakhs or more, the top-up health insurance plan will pay the amount above the amount of Rs 3 lakh. Now you have two options. You can either save in a bank account or in any form of investment Rs 3 lakh and year mark it as Health savings plan or you can buy a health insurance plan separately which will have a sum assured equal to the deductible limit which is Rs 3 lakh which will pay the amount up to deductible limit to meet your need.

Health Savings Account

In India, there is no concept of Health Savings plan in India. Hence you can opt for a bank savings account and save money in it up to the deductible amount so that you can meet the required expenses in any unfortunate event. You also have an option to save such amount in any form of investment and ensure that you receive the amount up to the deductible limit in any unfortunate future event. However, the investments that you make are subjected to risk and might lead to undesirable events in future. Also, saving such amount may not be possible for every individual due to financial limitations and you might face an unfortunate event and require the amount before you are able to accumulate such deductible amount. Hence, you must check the pros and cons require taking a decision. Besides limitations, a health savings account has benefits as well. Benefits of a Health Savings account are as follows:

1. This helps to incubate the habit of saving and the amount is unused or unclaimed can be used for any other expenses and is not limited to only healthcare expenses.
2. There is a time lap for using this money you have saved. Even in the event of no claim the money you have invested or saved is an asset and can be used for any future event.

Health Insurance Plan

Health Insurance Plan with a sum assured up to the deductible limit of the top-up health insurance plan is an ideal option. You can simply buy a health insurance plan with such sum assured up to the deductible amount which will pay the amount up to the deductible limit of your top-up health insurance plan in the event of a claim. This will help you to ensure the coverage by payments of premium and accumulating a sum assured of the desired amount. Health Insurance plans have several additions features and benefits with come in addition to the coverage of the amount insured in the plan. The benefits offered by the Health Insurance Plan are as follows:

1. You are not required to save the whole amount. You are required to pay the premiums of the plan for a certain period which will accumulate to the sum insured in the plan
2. Various additional benefits can be availed through a health insurance plan which includes coverage against medical expenses, pre and posts hospitalisation expenses, free medical check-ups, etc
3. Health Insurance plans provide tax benefits to the insured. The premiums paid for the health insurance plan can be availed as an exemption under section 80C of the Income Tax Act.
4. Health Insurance plans the sum assured on the event of any claim during the term of the plan which decreases your stress to ensure to accumulate the amount before the event of a claim
5. Health Insurance plans to enhance the benefits of investment in an insurance plan as some health insurance plans also offer participation of bonus in the company’ profit. This adds to an additional amount on the happening of any unfortunate event.

Conclusion

Nowadays medical expenses are increasing at a rapid rate. Hospitalisation and treatment cost leads to huge financial drainage to people and it is necessary to ensure financial support and security by buying health insurance plan with high coverage. If you have a high deductible health insurance plan, then you can ideally buy a health insurance plan and secure the deductible amount with the insurance company. Health Savings plan is suitable only for those who have high income and can save a part of it every month or year and accumulate such amount easily. However, it may not be possible for every individual as they may be backed by financial limitation. You should also keep in mind that health insurance plans involve no risk and you will receive the sum insured in the insurance plan in the event of claim, however, if you invest your money in any form of investment, it is prone to risk and you might not receive the desired amount in the event of any mishap