Posted on 07/22/2005 11:35:20 AM PDT by InvisibleChurch
Health savings accounts (HSAs) and other health care payment options have seen an increase in popularity. They have begun to receive wider acceptance in the work place and represent a philosophical shift toward consumer-directed health care, says the New York Times.
If successful, these accounts could dominate and become the exclusive option at some companies. According to the Times:
Nearly 8 percent of large employers already offer HSAs, 18 percent plan to offer them in 2006 and 47 percent are considering them. But awareness of HSAs is quite low and confusion runs high, in part because health insurers, third-party administrators and banks can offer them and because the infrastructure to support these accounts is a work in progress. In one case, UnitedHealth Group has established a bank, Exante, to offer HSAs, which will pay a 4 percent interest rate, include MasterCard debit cards and offers health reimbursement arrangements. Meanwhile, some employers have began to offer pre-paid medical cards linked with FSAs (flexible spending accounts), which act as credit cards specifically designated for purchases authorized by FSAs. Additionally, the number of health insurers offering HSAs has increased; thus, increasing enrollment, says the Pittsburgh Post-Gazette.
More than 1 million workers have enrolled in HSAs since 2003, when the accounts first became available. Some employers have replaced older catastrophic coverage plans with HSAs to make employees more aware of their health care costs. HSAs are becoming more attractive to younger, single individuals, those with higher incomes who can afford higher out-of-pocket costs and healthy individuals. HSAs are a tax-free way for individuals to save-up the financial resources to cover the high-deductible insurance plans associated with the accounts.
Source: Jennifer A. Kingson, "Health Care at the Swipe of a Card," New York Times, July 16, 2005; Eileen Alt Powell, "Health Insurance can be more affordable with Health Savings Accounts," Pittsburgh Post-Gazette, July 18, 2005.
For New York Times text (subscription required):
http://www.nytimes.com/2005/07/16/business/16cards.html
For Pittsburgh Post-Gazette text (subscription required):
http://www.post-gazette.com/pg/05199/537463.stm
For more on Medical Savings Accounts Health Issues:
http://www.ncpa.org/iss/hea/
Just imagine all the money that could be saved if every teacher was taken off their expensive health insurance and put on HSA's.
Of course they'd whine, because it wasn't as lavish, and they might end up having to pay for some things *gasp* OUT OF THEIR OWN POCKETS!!
But after all, it's for the children, right???
I'm trying to find a good HSA program now. But it is confusing.
We have a FSA through my husband's employer, but the allowed maximum is far too low for a family of six. Despite that, we really like the plan.
I would love to get a FSA combined with a catastrophic insurance plan, and put most of the money I am paying in premiums directly into our FSA.
This must kill Ted Kennedy.
www.HSAINSIDER.com has a great web site on banks and insurance providers.
As far as banks, try American Chartered Bank out of Illinois. No frills, but also no set-up or monthly fees and they pay a small interest rate. They will send you a debit card and 20 non-imprinted checks. You can order a kit with the contact information on HSA insider.
I've saved about 2/3 off my annual medical costs by ordering drugs on-line, splitting pills and shopping medical services. I use my debit card for everything.
Anyone know if self-employed and retired folks can have HSAs?
The plans are very popular with the self employed. Just buy a health plan that is "HSA qualified". A few moronic state regulators (NY, NJ, etc) may not permit them however.
Medicare does not yet offer an HSA choice, but we should lobby for this and something is in the works.
Well, whatever it takes....
LOL : )
We've tossed around the idea of enrolling in the flex spending acc't through my husband's work during open enrollment. If you don't mind, do you find it a wise idea financially? I don't know anyone who uses this option, and would like to know some opinions.
The plans are very popular with the self employed. Just buy a health plan that is "HSA qualified". A few moronic state regulators (NY, NJ, etc) may not permit them however.
Medicare does not yet offer an HSA choice, but we should lobby for this and something is in the works.
FSA's are good plans. However, current law applies the "use it or lose it" rule to any thing you put into it; any unused funds in an FSA are returned to the employer if they are not used up by 12/31, (and filed with the FSA administrator by 4/15). So plan carefully.
HSA's, however, DO NOT have a use it or lose it rule. All funds belong to the employee, and are carried over from year to year forever. You NEVER pay income tax on HSA funds as long as they are spent on eligible healthcare expenses. The catch is that you must be enrolled in an HSA qualified, High Deductible health plan.
It is absolutely a good idea, although the amount you will want to deposit depends on if you get to keep the balance at the end of the year. This means we don't have to reach the 2% threshhold for a tax deduction, we get it automatically.
We don't get to keep ours, but with six people, we deposit the maximum. We have already about used that up for this year.
You are now allowed to use it for over the counter meds and first aid supplies, as well.
We aren't really happy with the debit card, as the company DH's employer is using hardly allows us to use it anywhere, but it does work for RX and drugstore purchases.
Thanks. However, I don't quite understand "buy a health plan...." What kind of health plan are you talking about?
Mine works like an HSA and the money rolls over if you dont use it all.
If you burn it ALL then the program reverts to a 80/20 HMO
Its not perfect but HSAs cut out a huge amount of administrative costs.
Go to ehealthinsurance.com and look for the plans that are marked HSA.
Yes, anyone can get HSA qualified insurance, and the accompanying HSA account.
I'm self-employed and have had mine for 2 years now.
The HSA qualified health plans are full health insurance plans but they have a high deductible - you pay for the first so many $$ of health care you use, then the insurance kicks in, usually at a 100% rate.
I have a single plan with a $2600 deductible - I'm responsible for the first $2600 of my medical expenses every year. I stuff $2600 a year into the accompanying HSA account, and use that, tax-free, to may the charges that apply under the deductible.
Unfortunately, it looks like my state does not allow HSA's.
I didn't know there were any states that were able to prohibit HSAs, since it is a federal law and really only has tax consequences. There's certainly nothing (as far as I know) keeping you from a high deductible insurance plan; it's just that the deductible you pay would not be tax-exempt. I'm just curious - how is it possible for the state to block this ?
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