From: Tad Borek 
Newsgroups: misc.invest.financial-plan
Subject: Re: Health insurance in NJ worth it?  Any other way to protect my
 assets?
Date: 10 May 2005 21:50:31 GMT
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jay wrote:
> I live in NJ.  I am self-employed and have to buy my own individual health 
> insurance.
> 
> Any thoughts?

J-
Have you looked into an HSA-compatible plan in NJ? They can work well if 
you're self employed.

The way it works is that you get health insurance with a relatively high 
deductible, high enough to meet the IRS rules on HSAs (it actually needs 
to be a plan approved for use with an HSA). Nothing is covered until you 
hit that annual deductible. EG with the Blue Shield HSA-compatible plan 
here in CA, it's $2400. And then you still hit copays after that.

Alongside that, you open an HSA - a Health Savings Account - used to pay 
the medical expenses that aren't covered by insurance. Your HSA 
contributions are tax deductible, and you don't pay tax on your 
withdrawals from the account either, as long as they're used for 
qualified medical expenses. The most you can put into the HSA each year 
is your deductible amount (for the CA plan I mentioned, that would be 
the $2400).

Anyway it all flows out nicely tax wise. Because you're self employed 
your health insurance premiums are 100% deductible. The contribution to 
the HSA is also deductible. So you get to pay insurance and at least 
part of your medical expenses with pre-tax dollars.

You then write checks or use a debit card to tap into the HSA and pay 
doctors bills, prescriptions, eyeglasses - any qualified medical 
expenses. If you never use the HSA money you can essentially treat it as 
an IRA, at retirement. It's not a "use it or lose it" kind of account 
like the "FSA" (offered by some employers). And you can use it to buy 
long term care insurance later on down the line if that's of interest.

I've used and am happy with www.hsabank.com for the savings account 
portion. Their web site has good info on HSAs. You'd need to check 
health insurance providers in NJ to see who has competitive plans. But 
I'll bet you could find something cheaper than the numbers you mentioned.

One thing - an HSA is best if you don't get sick a lot and don't like 
going to the doctor. Again the first $2400 or thereabouts will be out of 
your pocket each year, and you still have big copays after that. It's 
better than catastrophic but it's not at all like a first-dollar kind of 
plan.

-Tad