If you haven't noticed, health insurance costs are out of control.

I know many people who have to pay $200-$275 each paycheck, just to get their family covered with health insurance. More often than not, this is a traditional 80/20 plan with a $500 deductable.

This is crazy.

If you do the math, it adds up to $5200-$7150 per year... simply for insurance.

It doesn't matter if your family was healthy all year... that money is still gone. If you were sick, this money only paid for the insurance. You still have to come up with the deductable and the 20% portion of your medical bills.

My company has found a better (... and less expensive) way to provide health insurance for our employees. It involves combining a high deductable health insurance policy with a health savings account.

The insurance portion of our health care plan has extremely low costs. Family coverage is roughly $55 per paycheck. So... if your family is healthy, your costs for the year will be less than $1500 total for health insurance.

The insurance policy is fairly simple. It is an 80/20 plan, just like other insurance policies... only it has a higher deductable to keep the premiums low. The deductable for a family is $2500/year. The out-of-pocket maximum (the most you would have to pay in a year for medical expenses) is $3500/year.

To cover the higher deductible, we have a health savings account as part of our health coverage.

A health savings account is an account that you can contribute pre-tax money into to cover medical, dental, vision, Rx, and any other health related expenses. If you are on the family plan, like I am, you can contribute up to $3000 per year into your account. This is your money... so it stays in your account until you use it. Just like any other savings account you might have.

Since I am on the family plan, my company also contributes around $1300 over the course of the year to MY health savings account. If I don't use that $1300, it stays in my account and an additional $1300 is put into my account the next year. (Truly a health care plan that pays you back!)

You may be thinking "This is great if you are healthy, but what if you have health care expenses... a $2500 deductable is pretty steep!"

Actually, if you contribute $85 per paycheck... and the company contributes around $50 a paycheck to your health savings account... Total money going to your account in a given year is around $3500.

More than enough to cover your $2500 deductable... that's enough to cover the $3500 yearly out-of-pocket maximum!

For me... it makes perfect sense. In a "good year" (i.e. no health expenses) I pay $1430 for health insurance and my employer contributes $1300 into my health savings account. My net cost for health coverage is only $130, because the $1300 my employer put into my health savings account is mine to keep!

In a "bad year" (i.e. lots of health care expenses) I pay $1430 for health insurance, my employer's contribution to my health savings account covers $1300 of my $3500 out-of-pocket maximum, and the remaining $2200 comes from the money I have contributed to my HSA.

Even in a "bad year", It's only costing me $140 per paycheck for ALL of my family's health care expenses... not the $200-$275+ a check for "insurance only" that you may have to spend with other employers.

Think of it this way... with many employers, you have to pay $200-$275 out of each check for "insurance only" to cover your family... with my company, $140 out of each check is enough to cover not just your insurance premiums but also ALL of your out-of-pocket medical costs for the year.

When you do the math and consider ALL the costs... the Insurance + HSA really saves you money!