Here are some frequently asked questions regarding Health Savings Accounts:
Is an HSA account right for me?
If you and your family are relatively healthy an HSA might be a good option for you. Your annual health care expenses may be low enabling you to save for expenses that arise later. If your family requires a lot of medical care, an HSA may not be the right choice.
How does an HSA work?
It's like a personal savings account, but money can only be used to pay for qualified medical expenses.
Who can set up an HSA?
You can start an HSA through a bank or other financial institution. Some insurance companies offer this as an option or your employer may offer an HSA option.
To qualify for an HSA, you must be under age 65 and carry a high-deductible health insurance plan (premiums are typically lower). You can use your HSA to pay eligible expenses not covered by your plan.
What counts as a high-deductible health plan?
The IRS decides each year what amount qualifies as a high-deductible health plan. Check the Treasury's Web site (http://www.ustreas.gov/offices/public-affairs/hsa/).
Can you withdraw money from HSAs for non-medical expenses?
If you withdraw funds from an HSA for non-medical expenses before you turn 65, you have to pay taxes on it as well as a 10 percent penalty. You can still withdraw money tax-free from an HSA for medical expenses after you turn 65.
Where can I get more information?
I Googled “Health Savings Account” today and got 496,000 hits. Just be cautious and recognize that companies pay lots of money to land on the first page for one of these searches. If they paid money for it, they have something to sell…
In conclusion, this is a subject worth a few hours of your time. Research it carefully. Talk to your tax advisor. Talk to your banker. Make your decision carefully because you could save a lot of money or lose some money on this one.
Friday, October 31, 2008
Nationalize Health Care?
The Grass is Not Necessarily Greener... Consider the French system:
Some of the most thoughtful proponents of national health care look to France as a model of how such a program could work. The French system ranks at or near the top of most cross-country comparisons and is ranked number one by the WHO.
Here are some excerpts from the entire article to help you understand that The Grass is not (!) Always Greener:
1. 99% of French citizens are covered by national health insurance.
2. The French health care system is the world’s third most expensive, costing 11% of GDP, behind only the US (17%) and Switzerland (11.5%).
3. In 2006, the system ran a 10.3 billion deficit. Some government projections suggest the deficit for the health care system alone could top 29 billion in 2010 and 66 billion by 2020.
4. Most services require substantial copayments ranging from 10 to 40% of the cost. As a result, most French consumers pay for about 13% of health care out of pocket --- roughly the same as US consumers.
5. To control the use of prescription drugs, the National Health Authority has begun to delist drugs from it reimbursement formulary. One study found that 90% of French asthma patients are not receiving drugs that might improve their condition.
6. The system has proven unable to address medical emergencies and was blamed in part for the deaths of 15,000 elderly individuals in the summer of 2003 during the European heat wave.
7. Some studies warn that France is in danger of “joining the group of countries [such as] the UK and Canada where the existence of rationing of health care and waiting lists raises serious questions of access to treatments by those who need them.”
8. The French also inherently believe (by a 3:1 margin) that the quality of care they receive is less important than everyone having equal access to that care.
9. To discourage over-utilization, France imposes substantial cost sharing on patients and relies heavily on an unregulated private insurance market to fill the gaps in coverage and allows consumers to pay extra for better or additional care, creating a two-tiered system.
10. This is clearly NOT the commonly portrayed style of national health care.
Excerpted from: July, 2008 – The Health Insurance Underwriter, Pages 32-38
Some of the most thoughtful proponents of national health care look to France as a model of how such a program could work. The French system ranks at or near the top of most cross-country comparisons and is ranked number one by the WHO.
Here are some excerpts from the entire article to help you understand that The Grass is not (!) Always Greener:
1. 99% of French citizens are covered by national health insurance.
2. The French health care system is the world’s third most expensive, costing 11% of GDP, behind only the US (17%) and Switzerland (11.5%).
3. In 2006, the system ran a 10.3 billion deficit. Some government projections suggest the deficit for the health care system alone could top 29 billion in 2010 and 66 billion by 2020.
4. Most services require substantial copayments ranging from 10 to 40% of the cost. As a result, most French consumers pay for about 13% of health care out of pocket --- roughly the same as US consumers.
5. To control the use of prescription drugs, the National Health Authority has begun to delist drugs from it reimbursement formulary. One study found that 90% of French asthma patients are not receiving drugs that might improve their condition.
6. The system has proven unable to address medical emergencies and was blamed in part for the deaths of 15,000 elderly individuals in the summer of 2003 during the European heat wave.
7. Some studies warn that France is in danger of “joining the group of countries [such as] the UK and Canada where the existence of rationing of health care and waiting lists raises serious questions of access to treatments by those who need them.”
8. The French also inherently believe (by a 3:1 margin) that the quality of care they receive is less important than everyone having equal access to that care.
9. To discourage over-utilization, France imposes substantial cost sharing on patients and relies heavily on an unregulated private insurance market to fill the gaps in coverage and allows consumers to pay extra for better or additional care, creating a two-tiered system.
10. This is clearly NOT the commonly portrayed style of national health care.
Excerpted from: July, 2008 – The Health Insurance Underwriter, Pages 32-38
Health Savings Accounts, a Primer
So, what’s a Health Savings Account, and why should I care?
One good reason is because they are often less expensive than traditional health insurance on a monthly basis!
You should also care because health insurance is expensive and most people are healthy – I mean, health insurance simply would not work if most people were sick – right?
So, think about your current situation – if you and your family are reasonably healthy, an HSA is worth considering. If you have young children, playing soccer or football, this might not be a good idea… wait a few years.
A Health Savings Account (HSA) is an account where you can deposit tax-free money to be used for future medical expenses. The HSA must be used in conjunction with a High Deductible health insurance plan.
Ah, now you understand, young kids, accidents, lots of emergency room visits… a high deductible is probably not a good idea.
When my children were growing up, I went to the emergency room with one child who had a soccer accident and met my wife coming out of the emergency room with another of our kids who had had a softball accident. True! But now, the kids are all grown… our insurance needs are very different. Take a moment and examine yours.
Pros:
· An HSA uses tax free money to pay healthcare expenses.
· It’s portable; you own the money; like an IRA
· An HSA travels with you; your money is not tied to your job.
· Some companies match contributions to HSAs.
· Earnings grow tax free (just like an IRA).
· Rolls over each year, you don’t lose it if you don’t use it
· Can invest the money to boost long-term returns
· You can even will your HSA to a beneficiary (but personally, I’d spend it on a cruise first and pay the penalties)
Cons:
· You’ll have to personally pay for everything until you have reached the deductible and/or coinsurance maximum of your health insurance.
· Best for healthy people, if you are not, this approach just is not right for you.
· IRS early withdrawal penalties and restrictions may apply on IRA accounts
· The account and maintenance fees can be high or free; be careful here.
There were more pros than cons… this is usually a good thing.
The bottom line on this is actually quite simple: If you take more of the risk with a higher deductible, the monthly fee for your health insurance will be less. Put the savings (plus a little) in an HSA where you save tax free money to use for the things your insurance doesn’t cover. If you are healthy, the money in that HSA is yours (not the insurance company’s).
One good reason is because they are often less expensive than traditional health insurance on a monthly basis!
You should also care because health insurance is expensive and most people are healthy – I mean, health insurance simply would not work if most people were sick – right?
So, think about your current situation – if you and your family are reasonably healthy, an HSA is worth considering. If you have young children, playing soccer or football, this might not be a good idea… wait a few years.
A Health Savings Account (HSA) is an account where you can deposit tax-free money to be used for future medical expenses. The HSA must be used in conjunction with a High Deductible health insurance plan.
Ah, now you understand, young kids, accidents, lots of emergency room visits… a high deductible is probably not a good idea.
When my children were growing up, I went to the emergency room with one child who had a soccer accident and met my wife coming out of the emergency room with another of our kids who had had a softball accident. True! But now, the kids are all grown… our insurance needs are very different. Take a moment and examine yours.
Pros:
· An HSA uses tax free money to pay healthcare expenses.
· It’s portable; you own the money; like an IRA
· An HSA travels with you; your money is not tied to your job.
· Some companies match contributions to HSAs.
· Earnings grow tax free (just like an IRA).
· Rolls over each year, you don’t lose it if you don’t use it
· Can invest the money to boost long-term returns
· You can even will your HSA to a beneficiary (but personally, I’d spend it on a cruise first and pay the penalties)
Cons:
· You’ll have to personally pay for everything until you have reached the deductible and/or coinsurance maximum of your health insurance.
· Best for healthy people, if you are not, this approach just is not right for you.
· IRS early withdrawal penalties and restrictions may apply on IRA accounts
· The account and maintenance fees can be high or free; be careful here.
There were more pros than cons… this is usually a good thing.
The bottom line on this is actually quite simple: If you take more of the risk with a higher deductible, the monthly fee for your health insurance will be less. Put the savings (plus a little) in an HSA where you save tax free money to use for the things your insurance doesn’t cover. If you are healthy, the money in that HSA is yours (not the insurance company’s).
For Children
Healthy Families - check this plan out - you may qualify and save a lot of money.
The description below is taken from the program brochure.
The Healthy Families Program is low cost insurance that provides health, dental and vision coverage to children who do not have insurance today and do not qualify for no-cost Medi-Cal.
When you enroll your children in Healthy Families, you choose the health, dental and vision insurance plans. The plans provide the health, dental and vision coverage for your children. This insurance pays most of your children’s costs for visits to doctors, dentists, and specialists. The insurance plans also contract with clinics, laboratories, pharmacies and hospitals for your children’s health care.
Don't let your children go without health insurance or without getting their immunizations without checking this program.
You can find more about Healthy Families at http://www.healthyfamilies.ca.gov/hfhome.asp
The description below is taken from the program brochure.
The Healthy Families Program is low cost insurance that provides health, dental and vision coverage to children who do not have insurance today and do not qualify for no-cost Medi-Cal.
When you enroll your children in Healthy Families, you choose the health, dental and vision insurance plans. The plans provide the health, dental and vision coverage for your children. This insurance pays most of your children’s costs for visits to doctors, dentists, and specialists. The insurance plans also contract with clinics, laboratories, pharmacies and hospitals for your children’s health care.
Don't let your children go without health insurance or without getting their immunizations without checking this program.
You can find more about Healthy Families at http://www.healthyfamilies.ca.gov/hfhome.asp
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