1. What is "Wellness Insurance ?
Wellness Insurance is health insurance that covers expenses incurred to prevent disease—like weight control, vitamins, supplements, and exercise—along with major medical expenses above an annual deductible. Traditional health or "sickness" insurance pays only for medical expenses when you are sick, and pays mostly for treating the symptoms of disease rather than for the prevention or disease.

2. How Can I Get Wellness Insurance Today?
Employers and health insurance companies will begin offering wellness insurance in several years. But you can get Wellness Insurance today by combining your own High-Deductible-Health-Insurance-Policy (HDHP) with a Wellness Savings Account (WSA). A WSA, as further explained herein, is an account used to pay for wellness expenses which could be established with a wellness provider or a third-party financial institution.

3. What is a High-Deductible-Health-Insurance-Policy (HDHP)?
A HDHP is a traditional health insurance policy with a higher-than-usual annual deductible-you are only reimbursed for medical expenses incurred above a cumulative annual amount, typically $2,000 to $4,500 per year, but you typically save this amount or more in your annual health insurance premium.

4. Why Would I Want an HDHP?
With an HDHP you decide how to spend the first few thousand dollars for your family's medical care without having to ask anyone's permission or argue later on for reimbursement. You can join your own Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO)—although most HDHP providers include PPO membership at no additional charge. You can select your own discount pharmacy plan, eyeglass plan, vitamins and supplement plan, fitness club membership—or any other customized wellness or sickness services. But, most of all, if you are healthy, you will save thousands of dollars that you can invest today in your continued wellness.

5. How Much Can I Save With an HDHP?
The annual premium savings with an HDHP is usually equal or less than the annual deductible amount. For example, a typical low- or no-deductible health insurance family policy may cost $5,000 per year, while the same policy from the same insurance company with a $2,500 per person annual deductible may cost only $2,000 per year-a $3,000 reduction in the annual premium. With this HDHP, even if a member of your family gets very sick and you have to pay for the first $2,500 of their medical expenses, you are still ahead $500 per year. And if you all remain well, you have up to $3,000 per year extra cash to invest in your continued wellness and save for future health expenses.

6. Why is such an HDHP Up to $3,000 Less Expensive?
Two reasons: (1) The first $2,500 per year of a family's medical care is typically spent in $100 increments in 25 transactions-and it costs the insurance company $30 or more to process the paperwork for each transaction ($2,500 medical cost + $750 processing costs = $3,350); and (2) Only healthy people without pre-existing medical conditions qualify for HDHP-insurance companies generally reject about 22 percent of HDHP applicants because they or someone in their family has a preexisting medical condition.

7. How Come I've Never Heard About HDHPs Before?
Three reasons:
(a) If you have a group health insurance policy, your employer doesn't want you to leave the group since your typical $5,000 annual premium goes to support other less-healthy group members;
(b) Insurance brokers do not actively promote HDHPs for individuals since the commission is about 1/3 to 2/5 of the commission on a non-HDHP policy; and
(c) If insurance companies tried to advertise HDHPs, they would get applications mostly from unhealthy applicants-which are expensive to process and cause regulatory problems for the insurance company when many of them get rejected.

8. What if a Member of My Family Becomes Chronically Ill?
This is the best part about an HDHP. Once someone has an individual HDHP, no matter how sick they or a dependent become, or what conditions they develop, their policy cannot be dropped nor premiums increased for this reason. This allows people with an HDHP (versus employer-provided group health insurance) to change jobs or go into business for themselves without being limited by preexisting medical conditions of themselves or a dependent.

9. What if I Receive Free Health Insurance From My Employer?
Even if you receive free health insurance from your employer, you should consider getting a HDHP for your dependents and possibly for yourself. Most private employers charge employees for dependents who participate in the company's group policy—and if your family is healthy it could be much less expensive to buy them an individual HDHP. This will guarantee your family coverage if anyone develops a medical condition and you have to change jobs or your company plan is terminated. Additionally, ask your employer about restructuring your job (e.g. as an independent contractor) so that you get paid more if you drop out of the company's group policy.

10. What are the Tax Implications of Paying for My Own Health Insurance?
Thanks to recent federal legislation, beginning in 2002 self-employed individuals may deduct 70 percent of the amount they spend on health insurance, and 100 percent in 2003 and thereafter. Prior to this legislation, it was often not advantageous to obtain your own health insurance since employer-provided health insurance enjoyed up to a 2-to-1 income tax advantage over purchasing health insurance yourself with after-tax dollars.

11. What is a Wellness Savings Account (WSA)™?
A Wellness Savings Account (WSA) is a deposit account you open with a wellness provider or at a third-party financial institution to invest the money you save by having an HDHP—this money is used to pay for current wellness expenses and the deductible amount on your HDHP should you become ill. Anyone with an HDHP should have readily-available savings of at least the annual deductible amount (e.g. $2,500) in case they or a family member become seriously ill.

12. What is a Medical Savings Account?
A Medical Savings Account is a special type of WSA authorized by Congress on an experimental basis until 2003. Similar to an IRA, you receive a deduction from your income taxes for up to $3,800 per year that you put into your MSA, your interest and dividends accrue tax-free, and after age 65 you may take your money out without penalties for non-medical purposes. But even better than a IRA, you may take your money out anytime tax-free to pay medical expenses before or after age 65.

13. How Do I Quality to Open an MSA Account
In order to qualify to open an MSA, you must first obtain a special type of MSA-approved HDHP with a $3,050-$4,600 annual cumulative family deductible. Then, you are allowed to invest in your MSA up to 75 percent ($2,300-$3,800) of this deductible amount each year. These figures are all increased annually with inflation in $50 increments, and are roughly half these amounts for single (non-family) individuals. To qualify for an MSA you may not be covered under any other major medical plan.

14. What Happens to My MSA After 2003?
Congress is allowing only 750,000 individuals to open MSAs until 2003-at which time the program expires unless it is renewed by new legislation. However, even if the program is terminated, anyone opening an MSA before December 31, 2002 receives these benefits for the rest of their lives-including the right to make continued annual contributions of $3,800 or more until age 65. Most political analysts today expect the MSA program to be extended and expanded before 2003.

15. What is a Super-MSA™?
A Super-MSA is an MSA designed for higher-income taxpayers with family income in excess of $75,000 per annum. You contribute the maximum each year to your MSA, but do not plan to make annual withdrawals except for emergencies. The money in your Super-MSA is invested for the highest long-term return and accumulates interest and dividends tax-free. Since taxpayers today receive all their income tax deductions when they put money into their MSA (versus taking it out for medical expenditures), there is no financial incentive to remove it before retirement-provided they have other funds available to pay medical expenses below their HDHP deductible. MSA funds accumulate interest tax-free, and MSAs have all the advantages of an IRA and then some-thus the first savings account any taxpaying family should have should be their Super-MSA.

16. Can Employers Offer MSAs and HDHPs to their Employees?
Yes. Employers with up to 50 employees may offer MSAs with HDHPs to their employees. If the employer grows beyond 50 employees, they are allowed to continue to offer MSAs to all employees provided their average number of employees since 1996 remains below 200. The employer obtains a group HDHP for all employees and makes equal contributions to each employee's MSA-tax-deductible to the employer and tax-free to the employee. An employer-sponsored MSA program saves employers money over group health insurance-while offering healthy employees an up-to-$3800 after-tax bonus (worth up-to-$7600 in pre-tax wages) to spend on wellness today or save for future medical expenses.