Archive for March, 2009
7 Things You Should Know About Health Savings Account Plans
Health savings accounts (HSAs) are wildly popular. Since their introduction in 2004, approximately 2.5 million Americans have enrolled in these so-called consumer-driven health plans. But, alas, HSA plans are not for everyone.
Here are some pointers to help you consider whether an HSA will benefit you and your family.
1. An HSA plan can cut healthcare costs by an average of 40% for many people.
Nevertheless, some people will not realize any net savings. Those most likely to realize significant savings are people who pay all of their own health insurance premiums, such as the self-employed, who are relatively healthy with few medical expenses.
2. Health savings account plans restore freedom of choice.
An HSA plan puts individual consumers back in control of their own health care. This also means that each individual must be more responsible for his or her own health care decisions. This approach of self-reliance is not always popular with or appropriate for everyone, especially those who have become comfortable with HMO-type “co-pay” plans.
3. Health savings accounts reduce income taxes.
Every dollar contributed into your HSA account is deducted from your taxable income in the same manner as contributions into a traditional IRA account–regardless of whether you spend it or just save it. Interest and investment earnings in a HSA accumulate tax-deferred, just like a traditional IRA. Unlike an IRA, withdrawals are tax-FREE when used to pay qualifying medical expenses. In many situations, new account holders are able to almost fully fund their HSA with money saved on premiums from a prior, higher priced plan. By stashing all or most of those savings into an HSA, the account holder realizes instant, additional savings in the form of reduced taxes.
4. You must have a properly qualified high health insurance policy in place first before
you can open a health savings account. One of the biggest misconceptions about HSA plans is that any insurance policy with a high deductible will qualify the policyholder to establish an HSA account. IRS regulations, however, are quite specific. Not just any policy with a so-called “high deductible” will suffice. It is important to be certain that you are insured under a properly qualified policy. Your best bet is to work with a qualified and duly licensed health insurance broker who is experienced in marketing properly qualified HSA plans.
5. You must be insurable in order to qualify for the HSA-qualified health insurance policy.
Because most people do not have a properly qualified high deductible insurance policy, they will need to switch insurance plans in order to become HSA-eligible. Unless coverage is being offered under small group reform laws (generally groups with 2-49 employees), the new high deductible policy will be individually underwritten by an insurance company. This means that some “pre-existing” conditions may not be fully covered. Alternatively, some companies may opt to cover certain “pre-existing” conditions in exchange for slightly higher premiums. Unfortunately, some health conditions simply render an individual uninsurable (examples: diabetes, chron’s disease, heart attack, etc.). Underwriting requirements vary by state, which is another reason to rely on an experienced health plan broker.
You should not switch to a HSA plan when the management of existing medical expenses is more important than saving up-front medical insurance premiums. Do not change health plans: in the middle of ongoing medical treatments; after a major health issue has been diagnosed; or if any family member is pregnant.
Generally, it is relatively hassle-free to qualify, i.e. no medical exams, etc. Most insurance companies offering HSA coverage will issue based on your application answers, perhaps accompanied by a follow-up telephone interview. In some cases, medical records may be requested, and companies always reserve the right to order a paramed exam.
6. Although HSA insurance premiums are low, they are not always as low as you might expect.
This happens for one main reason. Simply stated, the underlying insurance policy is just that—a health insurance policy. Although it has a “high” deductible, as required by law, the insurance company still must compensate for the risk it is assuming over the deductible amount, which it does by charging premiums. Many companies offer policies with “one deductible” that all family members contribute toward. With those plans, it is not uncommon for premiums for a 5000 family deductible with 100% coverage after the deductible to be comparable to a 2500 “per person” deductible plan with 80/20 coverage after the deductible.
Lower premiums represent just one element of the lower net cost achieved with an HSA plan. The low net cost of an HSA plan is achieved after factoring in the benefits of lower taxes, made possible by the tax-deductible contribution to the HSA account. Thus, if obtaining the lowest possible gross premium is your main concern, you may wish to consider a high deductible, non-HSA policy, especially if you do not see the benefit to contributing to a tax-deductible savings account.
7. An HSA offers your best chance to keep a lid on health insurance rate increases.
Make no mistake-you will have rate increases with your HSA insurance policy. Because an HSA qualified policy is still a health insurance policy at heart, there is no logical reason to presuppose that an HSA policy would be immune to rate increases required by an insurer to keep paying claims and stay in business. But what you can expect is that the actual dollar amount of any future rate increases will be substantially lower compared to traditional health insurance plans (regular PPO and HMO plans). This is true because insurers base increases on percentages, and the same percentage of a lower base premium results in a lower dollar increase. It’s not a perfect solution-but it is the most cost-efficient solution for many qualified people.
By: deanrichard77
About the Author:
Here are some pointers to help you consider whether an HSA will benefit you and your family.
1. An HSA plan can cut healthcare costs by an average of 40% for many people.
Nevertheless, some people will not realize any net savings. Those most likely to realize significant savings are people who pay all of their own health insurance premiums, such as the self-employed, who are relatively healthy with few medical expenses.
2. Health savings account plans restore freedom of choice.
An HSA plan puts individual consumers back in control of their own health care. This also means that each individual must be more responsible for his or her own health care decisions. This approach of self-reliance is not always popular with or appropriate for everyone, especially those who have become comfortable with HMO-type “co-pay” plans.
3. Health savings accounts reduce income taxes.
Every dollar contributed into your HSA account is deducted from your taxable income in the same manner as contributions into a traditional IRA account–regardless of whether you spend it or just save it. Interest and investment earnings in a HSA accumulate tax-deferred, just like a traditional IRA. Unlike an IRA, withdrawals are tax-FREE when used to pay qualifying medical expenses. In many situations, new account holders are able to almost fully fund their HSA with money saved on premiums from a prior, higher priced plan. By stashing all or most of those savings into an HSA, the account holder realizes instant, additional savings in the form of reduced taxes.
4. You must have a properly qualified high health insurance policy in place first before
you can open a health savings account. One of the biggest misconceptions about HSA plans is that any insurance policy with a high deductible will qualify the policyholder to establish an HSA account. IRS regulations, however, are quite specific. Not just any policy with a so-called “high deductible” will suffice. It is important to be certain that you are insured under a properly qualified policy. Your best bet is to work with a qualified and duly licensed health insurance broker who is experienced in marketing properly qualified HSA plans.
5. You must be insurable in order to qualify for the HSA-qualified health insurance policy.
Because most people do not have a properly qualified high deductible insurance policy, they will need to switch insurance plans in order to become HSA-eligible. Unless coverage is being offered under small group reform laws (generally groups with 2-49 employees), the new high deductible policy will be individually underwritten by an insurance company. This means that some “pre-existing” conditions may not be fully covered. Alternatively, some companies may opt to cover certain “pre-existing” conditions in exchange for slightly higher premiums. Unfortunately, some health conditions simply render an individual uninsurable (examples: diabetes, chron’s disease, heart attack, etc.). Underwriting requirements vary by state, which is another reason to rely on an experienced health plan broker.
You should not switch to a HSA plan when the management of existing medical expenses is more important than saving up-front medical insurance premiums. Do not change health plans: in the middle of ongoing medical treatments; after a major health issue has been diagnosed; or if any family member is pregnant.
Generally, it is relatively hassle-free to qualify, i.e. no medical exams, etc. Most insurance companies offering HSA coverage will issue based on your application answers, perhaps accompanied by a follow-up telephone interview. In some cases, medical records may be requested, and companies always reserve the right to order a paramed exam.
6. Although HSA insurance premiums are low, they are not always as low as you might expect.
This happens for one main reason. Simply stated, the underlying insurance policy is just that—a health insurance policy. Although it has a “high” deductible, as required by law, the insurance company still must compensate for the risk it is assuming over the deductible amount, which it does by charging premiums. Many companies offer policies with “one deductible” that all family members contribute toward. With those plans, it is not uncommon for premiums for a 5000 family deductible with 100% coverage after the deductible to be comparable to a 2500 “per person” deductible plan with 80/20 coverage after the deductible.
Lower premiums represent just one element of the lower net cost achieved with an HSA plan. The low net cost of an HSA plan is achieved after factoring in the benefits of lower taxes, made possible by the tax-deductible contribution to the HSA account. Thus, if obtaining the lowest possible gross premium is your main concern, you may wish to consider a high deductible, non-HSA policy, especially if you do not see the benefit to contributing to a tax-deductible savings account.
7. An HSA offers your best chance to keep a lid on health insurance rate increases.
Make no mistake-you will have rate increases with your HSA insurance policy. Because an HSA qualified policy is still a health insurance policy at heart, there is no logical reason to presuppose that an HSA policy would be immune to rate increases required by an insurer to keep paying claims and stay in business. But what you can expect is that the actual dollar amount of any future rate increases will be substantially lower compared to traditional health insurance plans (regular PPO and HMO plans). This is true because insurers base increases on percentages, and the same percentage of a lower base premium results in a lower dollar increase. It’s not a perfect solution-but it is the most cost-efficient solution for many qualified people.
By: deanrichard77
About the Author:
C. Dean Richard is a benefits consultant and financial planner with over 25 years experience. His nationwide agency has marketed health savings account plans and its predecessor, the medical savings accounts, since 1999. His familiarity with the HSA plans has earned him the nickname “the HSA king.” Clients of his agency range from white-collared self-employed professionals to spouses of employees who must purchase their own individual health insurance.
Health savings accounts
Frances
Learn How to Use Your Health Savings Account to Pay for Dental Expenses
Paying too much for coverage and not having enough coverage may be a familiar scenario for many of the residents in America. Not many health insurance companies offer policies with coverage that will give you dental, eye and alternative care. Americans are spending over $30 billion annually just for dental services and most of it is out of their own pocket. The prices for dental care can be very horrid, ranging between $850 to $1,000 for crowns, $150 for check-ups and cleaning and thousands of dollars for oral surgery.
Most of the dental plans available are expensive – the reason being that the insurance companies know that the individuals who purchase dental coverage already have dental problems and will definitely be using the coverage. This is also known as “adverse selection”.
Another option is available today with the HSA, or Health Savings Account. This is an account that you can use to accumulate tax-free dollars for medical bills that aren’t covered under your High Deductible Health Plan, or HDHP. It is required that you are enrolled in a HDHP to qualify for an HSA. These plans have high annual deductibles, but you receive low monthly premiums in exchange. Since the money in the HSA is tax-free, the account holder can funnel their dental expenses through the HSA for a tax write-off.
If you decide to get a health plan with dental coverage, the deductible cannot be paid for with the HSA, but the expenses rendered from services can. Since you’ll be funding your account with pre-tax dollars, you can easily save $500 or more off the costs of your family’s yearly dental expenses by paying for the charges from your Health Savings Account.
There are some other options for dental coverage available. With prepaid dental plans you will be charged low monthly fees, which are usually around $7/month for individuals and $16/month for families. The plans give you significant discounts on check-ups, fillings, extractions and other dental services provided by a network dentist. Some plans help with the expenses for eyeglasses and contact lenses. Since these plans aren’t insurance, it can be paid for with the HSA. When calculating what medical expenses will be reimbursed from your HSA, include dental fees and premiums from the prepaid dental plan.
More About Health Savings Accounts
Any health expenses that aren’t covered under you HDHP can be paid for with your HSA, such as deductibles, eyewear and dental care. As long as the bill you are trying to cover was needed for a health problem, it can be paid for. So if you decided to get a massage while at the spa – this wouldn’t be covered, but if your doctor recommended that you go to a masseuse after a painful accident; this would be covered. Having an HSA is the way health insurance should be – you get to choose what medical help you receive for your health conditions.
This means if you decide to get alternative medicine instead of going to an allopathic physician (conventional doctors that use prescriptions drugs and other treatments for quick-fixes instead of delving to the root of the problem), you can do so and have the expenses paid with the HSA.
What is Considered an “HSA Qualified Expense”?
The definition of qualified medical expenses is only partially given in the IRS Publication 502 and through various federal court rulings. There are few restrictions – as long as the expenses are for medical treatments or prevention for a health problem. For instance, yoga wouldn’t be identified as a medical expense unless your doctor recommended it as a treatment for medical reasons, such as for physical therapy after an injury, then it is qualified as a medical expense.
Many may question why the government would give a tax deduction for someone using some crazy vibration machine to cure their cancer. Again, the HSA is how health insurance should be. You should get to choose what treatments would best benefit your health condition. This gives account holders that power to manage their health as they see fit. Health Savings Accounts are encouraging individuals to take personal responsibility of their health care while loosening the monopoly traditional health care has had over the past couple of decades.
By: Wiley Long
About the Author:
Most of the dental plans available are expensive – the reason being that the insurance companies know that the individuals who purchase dental coverage already have dental problems and will definitely be using the coverage. This is also known as “adverse selection”.
Another option is available today with the HSA, or Health Savings Account. This is an account that you can use to accumulate tax-free dollars for medical bills that aren’t covered under your High Deductible Health Plan, or HDHP. It is required that you are enrolled in a HDHP to qualify for an HSA. These plans have high annual deductibles, but you receive low monthly premiums in exchange. Since the money in the HSA is tax-free, the account holder can funnel their dental expenses through the HSA for a tax write-off.
If you decide to get a health plan with dental coverage, the deductible cannot be paid for with the HSA, but the expenses rendered from services can. Since you’ll be funding your account with pre-tax dollars, you can easily save $500 or more off the costs of your family’s yearly dental expenses by paying for the charges from your Health Savings Account.
There are some other options for dental coverage available. With prepaid dental plans you will be charged low monthly fees, which are usually around $7/month for individuals and $16/month for families. The plans give you significant discounts on check-ups, fillings, extractions and other dental services provided by a network dentist. Some plans help with the expenses for eyeglasses and contact lenses. Since these plans aren’t insurance, it can be paid for with the HSA. When calculating what medical expenses will be reimbursed from your HSA, include dental fees and premiums from the prepaid dental plan.
More About Health Savings Accounts
Any health expenses that aren’t covered under you HDHP can be paid for with your HSA, such as deductibles, eyewear and dental care. As long as the bill you are trying to cover was needed for a health problem, it can be paid for. So if you decided to get a massage while at the spa – this wouldn’t be covered, but if your doctor recommended that you go to a masseuse after a painful accident; this would be covered. Having an HSA is the way health insurance should be – you get to choose what medical help you receive for your health conditions.
This means if you decide to get alternative medicine instead of going to an allopathic physician (conventional doctors that use prescriptions drugs and other treatments for quick-fixes instead of delving to the root of the problem), you can do so and have the expenses paid with the HSA.
What is Considered an “HSA Qualified Expense”?
The definition of qualified medical expenses is only partially given in the IRS Publication 502 and through various federal court rulings. There are few restrictions – as long as the expenses are for medical treatments or prevention for a health problem. For instance, yoga wouldn’t be identified as a medical expense unless your doctor recommended it as a treatment for medical reasons, such as for physical therapy after an injury, then it is qualified as a medical expense.
Many may question why the government would give a tax deduction for someone using some crazy vibration machine to cure their cancer. Again, the HSA is how health insurance should be. You should get to choose what treatments would best benefit your health condition. This gives account holders that power to manage their health as they see fit. Health Savings Accounts are encouraging individuals to take personal responsibility of their health care while loosening the monopoly traditional health care has had over the past couple of decades.
By: Wiley Long
About the Author:
Wiley Long – President, HSA for America . HSA for America makes it easy to learn about and set up a health savings account that best meets your needs.
Joellen Eidemiller
Learn How to Use Your Health Savings Account to Slow Down Your Ageing Process
One of the best aspects of having a Health Savings Account is that you can control your medical care. If you want to have a medical test or procedure done that is not covered by your health insurance, you can pay for it with pre-tax dollars from your health savings account. One of the processes of aging that scientists have been learning more about in recent years is glycation, and the formation of Advanced Glycation Endproducts, or AGEs. Here’s how to reduce this harmful process, and there is a simple test you can take and pay for from your Health Savings Account to see how you’re doing.
What is “Glycation” and what are AGEs?
When we take a piece of bread and put it in the toaster, it slowly turns brown. This is the result of a natural process called the “Maillard reaction”, in which sugars react with proteins. It is this process that gives flavor to pizza crust, roasted coffee, and beer.
The same process naturally happens in the human body. (So in a sense, we all slowly “brown” as we age). When a protein in your body is “glycated”, it has a sugar molecule attached to it, and can then bond to another protein in your body in a process called “cross-linking”. These damaged proteins result in the formation of Advanced Glycation Endproducts.
Exposure to AGEs in the body contributes to inflammation and to a large variety of age-related diseases, including cataracts, joint stiffness, Alzheimer’s disease, and cardiovascular diseases. Some AGEs can increase the risk of cancer, and others increase the risk of auto-immune diseases such as rheumatoid arthritis.
Reduce AGEs in your Food
When experimental mice are fed a low-AGE diet, they have better cardiovascular health, better kidney health, better blood sugar management, and they live longer. AGE formation is increased when foods are cooked at high temperatures, and for longer periods of time. You can significantly reduce AGEs created in food preparation by using boiling, poaching, or stewing rather than frying or grilling.
So one strategy is to simply reduce your consumption of “browned” foods. So for instance, fried shrimp will have way more harmful AGE compounds than boiled shrimp.
How to Reduce AGE Formation in your Body
AGE formation is particularly high in diabetics, due to uncontrolled sugar levels in the body. This is a reasons why they suffer from increased rates kidney disease, vision loss, and cardiovascular disease. Millions of Americans who have not been diagnosed as diabetic still have glucose handling difficulties, typically diagnosed as “metabolic syndrome”. It is becoming more evident that a diet low in foods that raise blood sugar rapidly (typically the “white” foods like pasta, bread, sugar, and rice) will reduce a person’s risk of diabetes or metabolic syndrome. This in turn will also reduce your body’s AGE formation.
Supplements You Can Take
Numerous dietary supplements have now been shown to reduce glycation, cross-linking, and AGE formation. Some experts recommend the following supplements, typically 500 mg to 1 gram of each, per day: Carnosine, Benfotiamine, Alpha-lipoic acid, Acetyl-l-carnitine, and Curcumin.
If your health care practitioner recommends supplements for the prevention or treatment of a specific health condition, you can pay for them from your HSA.
A common blood test that diabetics have done is Glycated Hemoglobin A1c. This measures how much the red blood cells have become glycated over the past few months, and is an indicator of average blood sugar levels.
Stay Healthy, Grow Your Health Savings Account
So be proactive – fund your HSA to the max, do what you can to optimize your health, and let your Health Savings Account grow.
By: Wiley Long
About the Author:
What is “Glycation” and what are AGEs?
When we take a piece of bread and put it in the toaster, it slowly turns brown. This is the result of a natural process called the “Maillard reaction”, in which sugars react with proteins. It is this process that gives flavor to pizza crust, roasted coffee, and beer.
The same process naturally happens in the human body. (So in a sense, we all slowly “brown” as we age). When a protein in your body is “glycated”, it has a sugar molecule attached to it, and can then bond to another protein in your body in a process called “cross-linking”. These damaged proteins result in the formation of Advanced Glycation Endproducts.
Exposure to AGEs in the body contributes to inflammation and to a large variety of age-related diseases, including cataracts, joint stiffness, Alzheimer’s disease, and cardiovascular diseases. Some AGEs can increase the risk of cancer, and others increase the risk of auto-immune diseases such as rheumatoid arthritis.
Reduce AGEs in your Food
When experimental mice are fed a low-AGE diet, they have better cardiovascular health, better kidney health, better blood sugar management, and they live longer. AGE formation is increased when foods are cooked at high temperatures, and for longer periods of time. You can significantly reduce AGEs created in food preparation by using boiling, poaching, or stewing rather than frying or grilling.
So one strategy is to simply reduce your consumption of “browned” foods. So for instance, fried shrimp will have way more harmful AGE compounds than boiled shrimp.
How to Reduce AGE Formation in your Body
AGE formation is particularly high in diabetics, due to uncontrolled sugar levels in the body. This is a reasons why they suffer from increased rates kidney disease, vision loss, and cardiovascular disease. Millions of Americans who have not been diagnosed as diabetic still have glucose handling difficulties, typically diagnosed as “metabolic syndrome”. It is becoming more evident that a diet low in foods that raise blood sugar rapidly (typically the “white” foods like pasta, bread, sugar, and rice) will reduce a person’s risk of diabetes or metabolic syndrome. This in turn will also reduce your body’s AGE formation.
Supplements You Can Take
Numerous dietary supplements have now been shown to reduce glycation, cross-linking, and AGE formation. Some experts recommend the following supplements, typically 500 mg to 1 gram of each, per day: Carnosine, Benfotiamine, Alpha-lipoic acid, Acetyl-l-carnitine, and Curcumin.
If your health care practitioner recommends supplements for the prevention or treatment of a specific health condition, you can pay for them from your HSA.
A common blood test that diabetics have done is Glycated Hemoglobin A1c. This measures how much the red blood cells have become glycated over the past few months, and is an indicator of average blood sugar levels.
Stay Healthy, Grow Your Health Savings Account
So be proactive – fund your HSA to the max, do what you can to optimize your health, and let your Health Savings Account grow.
By: Wiley Long
About the Author:
By Wiley Long – President, HSA for America ( http://www.health–savings–accounts.com ) – The nation’s leading independent health insurance firm specializing in individual and family coverage that works with a Health Savings Account.
Emily Krzyston
Bridging the Gaps with Health Savings Accounts
As often happens to investment vehicles created by legislation, Health Savings Accounts (HSAs) have suffered under the complex regulations meant to discourage misuse. However, the accounts have potential to do more than simply allow investors to save and pay for health-care expenses with tax-free dollars. They offer a potential way for individuals to bridge gaps in health insurance coverage that may occur during times of unemployment or in retirement.
The Medicare Modernization Act of 2003 created HSAs. Anyone younger than 65 can open an HSA after purchasing a qualified high-deductible health insurance plan. An individual can maintain an HSA and be covered under other insurance policies, as long as that person doesn’t “double dip” and have medical expenses paid by both insurance and the HSA.
To be considered “qualified” the insurance plan must have a deductible of at least $1,050 for individuals or $2,100 for family, and have a limit of $5,250 individual and $10,500 family for out-of-pocket expenses. Choosing a policy that qualifies can involve insurance and tax issues that should be discussed with professionals in those fields.
Contribution caps are the lesser of the insurance plan deductible or the IRS maximum. For 2006, the IRS max is $2,700 for individuals and $5,450 for families. Individuals 55 or older can make a $700 catch-up contribution in 2006.
Many employers offer flexibility spending accounts for medical expenses (and sometimes child care) that allow employees to set aside pre-tax dollars for medical expenses not covered by the company’s health insurance, including premiums and deductibles. Unlike flexible spending accounts, however, HSA contributions and gains can be rolled from year to year—there’s no “use it or lose it” requirement—and you retain ownership of the funds even if you terminate employment. If your employer offers a flexible spending account, you should take a description of the account requirements and restrictions when you discuss an HSA with your financial professional.
Because you establish an HSA independent of your employer, these accounts can provide a health care expense “safety net” should you terminate employment (voluntarily or involuntarily). They also provide retirees with another investment vehicle that offers tax deductions for contributions, tax-free growth and tax-free withdrawals for medical expenses. Withdrawals for nonmedical expenses after age 65 are still taxable, and a 10% penalty applies for nonmedical withdrawals before age 65.
If you plan to use HSA funds in the near term, a liquid, interest-bearing account like a savings account may be appropriate. However, if you don’t anticipate an immediate need for all or part of your HSA funds, the accounts are self-directed, allowing you to use other investment options. Your financial professional can help you determine which investment vehicle best meets your needs.
According to a 2006 survey by Watson Wyatt and the National Business Group on Health, health care insurance premiums have been rising at two to three times the rate of inflation for the past five years. Understanding the complexities of health savings accounts may be one way to lessen the blow and prepare for the future.
By: Robert Valentine
About the Author:
The Medicare Modernization Act of 2003 created HSAs. Anyone younger than 65 can open an HSA after purchasing a qualified high-deductible health insurance plan. An individual can maintain an HSA and be covered under other insurance policies, as long as that person doesn’t “double dip” and have medical expenses paid by both insurance and the HSA.
To be considered “qualified” the insurance plan must have a deductible of at least $1,050 for individuals or $2,100 for family, and have a limit of $5,250 individual and $10,500 family for out-of-pocket expenses. Choosing a policy that qualifies can involve insurance and tax issues that should be discussed with professionals in those fields.
Contribution caps are the lesser of the insurance plan deductible or the IRS maximum. For 2006, the IRS max is $2,700 for individuals and $5,450 for families. Individuals 55 or older can make a $700 catch-up contribution in 2006.
Many employers offer flexibility spending accounts for medical expenses (and sometimes child care) that allow employees to set aside pre-tax dollars for medical expenses not covered by the company’s health insurance, including premiums and deductibles. Unlike flexible spending accounts, however, HSA contributions and gains can be rolled from year to year—there’s no “use it or lose it” requirement—and you retain ownership of the funds even if you terminate employment. If your employer offers a flexible spending account, you should take a description of the account requirements and restrictions when you discuss an HSA with your financial professional.
Because you establish an HSA independent of your employer, these accounts can provide a health care expense “safety net” should you terminate employment (voluntarily or involuntarily). They also provide retirees with another investment vehicle that offers tax deductions for contributions, tax-free growth and tax-free withdrawals for medical expenses. Withdrawals for nonmedical expenses after age 65 are still taxable, and a 10% penalty applies for nonmedical withdrawals before age 65.
If you plan to use HSA funds in the near term, a liquid, interest-bearing account like a savings account may be appropriate. However, if you don’t anticipate an immediate need for all or part of your HSA funds, the accounts are self-directed, allowing you to use other investment options. Your financial professional can help you determine which investment vehicle best meets your needs.
According to a 2006 survey by Watson Wyatt and the National Business Group on Health, health care insurance premiums have been rising at two to three times the rate of inflation for the past five years. Understanding the complexities of health savings accounts may be one way to lessen the blow and prepare for the future.
By: Robert Valentine
About the Author:
Robert Valentine is a well-known expert in the matters concerning investors. His popular Insurance
articles have been published by several publications throughout the United States. Please visit his website, http://www.themoneyalert.com to view his column.
articles have been published by several publications throughout the United States. Please visit his website, http://www.themoneyalert.com to view his column.
Jc Sittner
Michael Moore’s Sicko Misses the Solution: Health Savings Accounts
Michael Moore’s new movie SICKO is a humorous and at times emotionally moving look at the state of U.S. healthcare, but it promotes a solution (government healthcare) that would only make matters worse. Instead of more bureaucracy and government control, we should be encouraging competition among healthcare providers and personal responsibility among consumers. Health savings accounts, or HSAs, do just that, and are the future of healthcare in America.
Many well-meaning people believe that a government take-over of healthcare coverage, called a “single-payer” system, is the answer. But if one simply looks at the countries that currently have single-payer systems, it is quite apparent that they are failed systems, with the citizens of these countries clamoring for change.
Because demand goes up when prices go down, the only way a government that provides “free” healthcare can control cost is by limiting access. So citizens in countries with single-payer systems always suffer long waits and lack of access to medical care and technologies.
For instance, in Canada there are currently over 800,000 people on waiting lists for medical procedures. The average wait time for people who are referred for surgery is over four months! If it weren’t for the fact that thousands of Canadians come to the U.S. each year for treatment, the average wait times would be even longer.
Per capita, Canada only has 20% the number of MRIs that the U.S. has, and only 14% as many CAT Scans. There are hundreds of prescription drugs available in the U.S. that are not yet available in Canada as they try to control costs.
The situation in Britain is no better, with over 1 million people currently on waiting lists. In June Britain’s Health Department found that 1 in 8 patients waits over a year for scheduled surgery, and shortages are forcing more than 50,000 operations to be cancelled each year.
Waiting for surgery is not just an inconvenience; it can mean the difference between living and dying. For instance, in the U.S. the survival rate for stage 1 colon cancer is 90%; in Britain it is 70%. American women diagnosed with Stage I ****** cancer have a 97% survival rate after 5 years; in Britain it’s only 78%.
As Americans contemplate copying these failed systems, citizens in Europe and Canada are headed in the opposite direction. Germany just recently passed laws to enhance insurance competition, Sweden has begun privatizing some of its healthcare, and millions of Europeans are finding ways to opt-out of their government healthcare systems.
In Britain there are now over 6.5 million people who carry private insurance, despite the availability of “free” coverage from their NHS. Another 250,000 self-fund each year for acute private surgery, because they don’t want to or cannot afford to wait. Even the Labour party now favors privatization of healthcare in Britain.
In 2005 the Canadian Supreme court issued a ruling which stated, “The prohibition on obtaining private health insurance… is not constitutional where the public system fails to deliver reasonable services.” Private healthcare clinics are now opening in Canada at the rate of one per week.
Unfortunately, under a socialized system, your body and your life are no longer under your control.
Isn’t it amazing that some of the same people who criticize government ineptness – including Katrina, the many screw-ups in the war on terror, No Child Left Behind, and more – actually think the government would do a good job managing the nation’s healthcare?
Freedom, choice, and innovation are what have given us the highest quality healthcare in the world. We absolutely do need change, but the answer is less government intervention, not more. By encouraging consumer-driven solutions, competition, and price transparency, we can help avoid the healthcare disaster that government control would bring.
One big part of the solution that is already beginning is the adoption of Health Savings Accounts. Over five million Americans already have an HSA set up, and over five billion dollars is already invested in these special bank accounts.
People who have an HSA can set aside money to pay for future medical expenses, and get a tax deduction to do so. Because you must have a high-deductible health plan to contribute to an HSA, these plans encourage people to more carefully spend their healthcare dollars, since money they don’t spend stays in the HSA.
The result is that medical providers once again are competing for customers by lowering prices, and increasing quality and convenience. Already we are seeing plummeting prices on prescription drugs, and low-cost medical clinics spring up in Wal-Mart and other retail locations.
As more and more people obtain HSAs, we will not only see a benefit for the consumers, but we will also begin to see more people who take a proactive attitude when it comes to their health. A Health Savings Account owner who exercises and eats right will likely have a much larger balance in their account by the time they retire.
These changes will result in a healthier and wealthier group of retirees and a smaller burden on our tax system in the future.
By: Wiley Long
About the Author:
Many well-meaning people believe that a government take-over of healthcare coverage, called a “single-payer” system, is the answer. But if one simply looks at the countries that currently have single-payer systems, it is quite apparent that they are failed systems, with the citizens of these countries clamoring for change.
Because demand goes up when prices go down, the only way a government that provides “free” healthcare can control cost is by limiting access. So citizens in countries with single-payer systems always suffer long waits and lack of access to medical care and technologies.
For instance, in Canada there are currently over 800,000 people on waiting lists for medical procedures. The average wait time for people who are referred for surgery is over four months! If it weren’t for the fact that thousands of Canadians come to the U.S. each year for treatment, the average wait times would be even longer.
Per capita, Canada only has 20% the number of MRIs that the U.S. has, and only 14% as many CAT Scans. There are hundreds of prescription drugs available in the U.S. that are not yet available in Canada as they try to control costs.
The situation in Britain is no better, with over 1 million people currently on waiting lists. In June Britain’s Health Department found that 1 in 8 patients waits over a year for scheduled surgery, and shortages are forcing more than 50,000 operations to be cancelled each year.
Waiting for surgery is not just an inconvenience; it can mean the difference between living and dying. For instance, in the U.S. the survival rate for stage 1 colon cancer is 90%; in Britain it is 70%. American women diagnosed with Stage I ****** cancer have a 97% survival rate after 5 years; in Britain it’s only 78%.
As Americans contemplate copying these failed systems, citizens in Europe and Canada are headed in the opposite direction. Germany just recently passed laws to enhance insurance competition, Sweden has begun privatizing some of its healthcare, and millions of Europeans are finding ways to opt-out of their government healthcare systems.
In Britain there are now over 6.5 million people who carry private insurance, despite the availability of “free” coverage from their NHS. Another 250,000 self-fund each year for acute private surgery, because they don’t want to or cannot afford to wait. Even the Labour party now favors privatization of healthcare in Britain.
In 2005 the Canadian Supreme court issued a ruling which stated, “The prohibition on obtaining private health insurance… is not constitutional where the public system fails to deliver reasonable services.” Private healthcare clinics are now opening in Canada at the rate of one per week.
Unfortunately, under a socialized system, your body and your life are no longer under your control.
Isn’t it amazing that some of the same people who criticize government ineptness – including Katrina, the many screw-ups in the war on terror, No Child Left Behind, and more – actually think the government would do a good job managing the nation’s healthcare?
Freedom, choice, and innovation are what have given us the highest quality healthcare in the world. We absolutely do need change, but the answer is less government intervention, not more. By encouraging consumer-driven solutions, competition, and price transparency, we can help avoid the healthcare disaster that government control would bring.
One big part of the solution that is already beginning is the adoption of Health Savings Accounts. Over five million Americans already have an HSA set up, and over five billion dollars is already invested in these special bank accounts.
People who have an HSA can set aside money to pay for future medical expenses, and get a tax deduction to do so. Because you must have a high-deductible health plan to contribute to an HSA, these plans encourage people to more carefully spend their healthcare dollars, since money they don’t spend stays in the HSA.
The result is that medical providers once again are competing for customers by lowering prices, and increasing quality and convenience. Already we are seeing plummeting prices on prescription drugs, and low-cost medical clinics spring up in Wal-Mart and other retail locations.
As more and more people obtain HSAs, we will not only see a benefit for the consumers, but we will also begin to see more people who take a proactive attitude when it comes to their health. A Health Savings Account owner who exercises and eats right will likely have a much larger balance in their account by the time they retire.
These changes will result in a healthier and wealthier group of retirees and a smaller burden on our tax system in the future.
By: Wiley Long
About the Author:
By Wiley Long – President, HSA for America (http://www.health–savings–accounts.com ) – The nation’s leading independent health insurance firm specializing in individual and family coverage that works with a Health Savings Account.
Caroll Bulinski
Health Savings Accounts Put You in Control of Your Healthcare
As Health Savings Accounts grow in popularity, there is growing fear among those who want to nationalize healthcare that they will not be able to put the cat back in the bag. There are already over 3 million individuals with an HSA, and by 2010, the Treasury Department estimates as many as 45 million Americans will be covered by HSA plans. They will have billions of dollars invested to cover future medical expenses, and by then it will be politically impossible to take that benefit away.
If you currently have a high-deductible health insurance plan, you can invest tax-free money in a Health Savings Account. You get to choose the type of investment – anything from savings accounts or money market funds, to a full brokerage house. If you invest wisely, you could have well over $500,000 in the account when you retire. You will be able to use that money to pay for your healthcare in whatever way you please, tax free. You can go to the best surgeons, or the least expensive doc-in-a-box. If you decide to treat a condition with acupuncture, homeopathy, or psychic healers, you can do that too. Whoever offers you the service you want with the best combination of quality and price should get your business. And since you are the one paying, it will be completely your choice. You have healthcare freedom.
If proponents of a single-payer system were to ever have their way, you would be at the mercy of a government bureaucrat when it comes to your healthcare. To see what this may look like, all one has to do is look at the state of health care in Canada, England, New Zealand, and the parts of Europe that have not yet abandoned single-payer systems.
Proponents of a single-payer system tend to point to Canada or England as countries that cover all their citizens with quality healthcare, while spending less money per person than the U.S. But if we look a little more closely, we see that these publicly financed health insurance systems are breaking down, the quality is low, and the costs can be quite high. Here’s what Canadians have to deal with if they need medical care:
Long waits. Hundreds of Canadians go to Detroit and other U.S. cities every year for procedures like CAT scans, which they can obtain treatment in a matter of days. In Canada, the wait is typically six months. Currently 876,000 Canadians are on waiting lists for medical procedures.
Difficulty in getting life-enhancing procedures done. If a Canadian is having a heart attack, they will be treated right then. But if the surgery is considered “elective” (meaning that possible death is not eminent), the wait could be months or years. Average wait for cataract removal is 18 months. Average wait for a knee replacement is one year.
Increased risk of dieing. The average Canadian waits eight weeks to see a specialist, and another nine weeks before getting treated. This is even the case with conditions that are likely to get much worse if there is any delay in treatment. For example, the median time for a mastectomy is 14 weeks, enough time for the cancer to spread to other parts of the body. In fact, 28% of those diagnosed with ****** cancer in Canada die from it, while the mortality ratio in the U.S. is only 25%.
Things don’t look any better across the ocean. Each year the British National Health Service cancels 410,000 surgeries because of resource shortages. According to the London Sunday Times, there are currently over 1 million Brits awaiting elective surgery. Thomas Cook, a British travel agency, is even considering offering “sun-and-surgery” packaged trips to Indian hospitals for British citizens fed up with low standards and long waiting times for surgery.
The British and Canadian governments have the power to make healthcare “free”, but they are unable to control its costs. So the costs become longer (and potentially fatal) delays, and fewer innovations.
Its not surprising when you think about what is happening. Universal health insurance systems always encourage over-consumption by patients, and such over-consumption always leads to financial crises. The result is inevitably broken promises about universal access and quality care. Because there are always limited resources, single-payer systems tend to overspend on primary care for the healthy, while denying more expensive specialist care to those with serious medical problems. This is because most people (voters) are healthy most of the time, and the sick and dieing are less likely to be able to organize into a political force.
What makes the United States such a great country is the “freedoms” we enjoy. Though our freedoms seem to be constantly under attack, there is still no nation in the world that has the freedom of the press, freedom of religion, freedom of association, or the free markets that we have in the United States. As anyone who understands even a smidgen of economics knows, free markets encourage competition and innovation, which lead to lower prices and better quality.
Though the U.S. system of health care can not really be considered a “free-market”, it is certainly much more free than any single payer system. Some of the benefits we see as a result of our current healthcare system include:
U.S. medicine produces the best outcomes for virtually every patient, from premature babies to elderly cancer patients. American companies are the chief source worldwide of new treatments and procedures which each year are used to save millions of lives. U.S. medical training and research facilities are the best in the world.
Though Canadians might have to wait a year or two for hip replacement surgery, they can get the same operation done on their dog in less than a week. This is because veterinarians are competing for that business, finding innovative ways to deliver service more quickly and less expensively. Another example is laser eye surgery, a procedure that is rarely covered by insurance, so laser eye surgeons must compete on the basis of cost and quality. While costs for most medical procedures have been going up every year, the cost for this procedure has dropped by 80% over the past decade.
Unfortunately, U.S. healthcare policies still tend to limit competition, restrict consumer’s freedom to choose, and discourage consumers from shopping for value. Thus, there are too few choices and there has been little attention paid to price and quality of service. The answer is clearly not more government intervention, but instead letting competition and the power of the marketplace drive down prices and increase quality and access to care.
Health Savings Accounts are the Solution
There is increasing recognition that third-party health insurance payers are actually a major cause of escalating medical costs and the decline in the quality of service. The increasing adoption of HSA plans has already begun to cause greater transparency and competition in the medical marketplace. There are now physicians available by phone, medical kiosks setting up in malls, doctors that accept only cash (and who charge significantly less), and others competing directly for the consumer’s healthcare dollar.
Don’t be fooled by the politicians who advocate a single-payer system, claiming their only concern is the uninsured. If a single body (such as a government bureaucracy) controls healthcare, they control one seventh of the national economy. And everywhere in the world that central control of the economy has been tried, it has been a colossal failure.
As public policy reforms centered on individual choice continue to gain wider footholds, the result will be greater prosperity, greater choice, and a better value for all. The culture of dependence and entitlement will begin to fade, as millions of individuals demand further policy reforms that will reinstate the values of freedom and personal responsibility that helped establish this great nation.
As more consumers turn to health savings accounts, the market will respond. Innovative providers will begin to compete more on price and quality of service, and those that provide the best value will get wealthy doing so. And all consumers will benefit.
By: Wiley Long
About the Author:
If you currently have a high-deductible health insurance plan, you can invest tax-free money in a Health Savings Account. You get to choose the type of investment – anything from savings accounts or money market funds, to a full brokerage house. If you invest wisely, you could have well over $500,000 in the account when you retire. You will be able to use that money to pay for your healthcare in whatever way you please, tax free. You can go to the best surgeons, or the least expensive doc-in-a-box. If you decide to treat a condition with acupuncture, homeopathy, or psychic healers, you can do that too. Whoever offers you the service you want with the best combination of quality and price should get your business. And since you are the one paying, it will be completely your choice. You have healthcare freedom.
If proponents of a single-payer system were to ever have their way, you would be at the mercy of a government bureaucrat when it comes to your healthcare. To see what this may look like, all one has to do is look at the state of health care in Canada, England, New Zealand, and the parts of Europe that have not yet abandoned single-payer systems.
Proponents of a single-payer system tend to point to Canada or England as countries that cover all their citizens with quality healthcare, while spending less money per person than the U.S. But if we look a little more closely, we see that these publicly financed health insurance systems are breaking down, the quality is low, and the costs can be quite high. Here’s what Canadians have to deal with if they need medical care:
Long waits. Hundreds of Canadians go to Detroit and other U.S. cities every year for procedures like CAT scans, which they can obtain treatment in a matter of days. In Canada, the wait is typically six months. Currently 876,000 Canadians are on waiting lists for medical procedures.
Difficulty in getting life-enhancing procedures done. If a Canadian is having a heart attack, they will be treated right then. But if the surgery is considered “elective” (meaning that possible death is not eminent), the wait could be months or years. Average wait for cataract removal is 18 months. Average wait for a knee replacement is one year.
Increased risk of dieing. The average Canadian waits eight weeks to see a specialist, and another nine weeks before getting treated. This is even the case with conditions that are likely to get much worse if there is any delay in treatment. For example, the median time for a mastectomy is 14 weeks, enough time for the cancer to spread to other parts of the body. In fact, 28% of those diagnosed with ****** cancer in Canada die from it, while the mortality ratio in the U.S. is only 25%.
Things don’t look any better across the ocean. Each year the British National Health Service cancels 410,000 surgeries because of resource shortages. According to the London Sunday Times, there are currently over 1 million Brits awaiting elective surgery. Thomas Cook, a British travel agency, is even considering offering “sun-and-surgery” packaged trips to Indian hospitals for British citizens fed up with low standards and long waiting times for surgery.
The British and Canadian governments have the power to make healthcare “free”, but they are unable to control its costs. So the costs become longer (and potentially fatal) delays, and fewer innovations.
Its not surprising when you think about what is happening. Universal health insurance systems always encourage over-consumption by patients, and such over-consumption always leads to financial crises. The result is inevitably broken promises about universal access and quality care. Because there are always limited resources, single-payer systems tend to overspend on primary care for the healthy, while denying more expensive specialist care to those with serious medical problems. This is because most people (voters) are healthy most of the time, and the sick and dieing are less likely to be able to organize into a political force.
What makes the United States such a great country is the “freedoms” we enjoy. Though our freedoms seem to be constantly under attack, there is still no nation in the world that has the freedom of the press, freedom of religion, freedom of association, or the free markets that we have in the United States. As anyone who understands even a smidgen of economics knows, free markets encourage competition and innovation, which lead to lower prices and better quality.
Though the U.S. system of health care can not really be considered a “free-market”, it is certainly much more free than any single payer system. Some of the benefits we see as a result of our current healthcare system include:
U.S. medicine produces the best outcomes for virtually every patient, from premature babies to elderly cancer patients. American companies are the chief source worldwide of new treatments and procedures which each year are used to save millions of lives. U.S. medical training and research facilities are the best in the world.
Though Canadians might have to wait a year or two for hip replacement surgery, they can get the same operation done on their dog in less than a week. This is because veterinarians are competing for that business, finding innovative ways to deliver service more quickly and less expensively. Another example is laser eye surgery, a procedure that is rarely covered by insurance, so laser eye surgeons must compete on the basis of cost and quality. While costs for most medical procedures have been going up every year, the cost for this procedure has dropped by 80% over the past decade.
Unfortunately, U.S. healthcare policies still tend to limit competition, restrict consumer’s freedom to choose, and discourage consumers from shopping for value. Thus, there are too few choices and there has been little attention paid to price and quality of service. The answer is clearly not more government intervention, but instead letting competition and the power of the marketplace drive down prices and increase quality and access to care.
Health Savings Accounts are the Solution
There is increasing recognition that third-party health insurance payers are actually a major cause of escalating medical costs and the decline in the quality of service. The increasing adoption of HSA plans has already begun to cause greater transparency and competition in the medical marketplace. There are now physicians available by phone, medical kiosks setting up in malls, doctors that accept only cash (and who charge significantly less), and others competing directly for the consumer’s healthcare dollar.
Don’t be fooled by the politicians who advocate a single-payer system, claiming their only concern is the uninsured. If a single body (such as a government bureaucracy) controls healthcare, they control one seventh of the national economy. And everywhere in the world that central control of the economy has been tried, it has been a colossal failure.
As public policy reforms centered on individual choice continue to gain wider footholds, the result will be greater prosperity, greater choice, and a better value for all. The culture of dependence and entitlement will begin to fade, as millions of individuals demand further policy reforms that will reinstate the values of freedom and personal responsibility that helped establish this great nation.
As more consumers turn to health savings accounts, the market will respond. Innovative providers will begin to compete more on price and quality of service, and those that provide the best value will get wealthy doing so. And all consumers will benefit.
By: Wiley Long
About the Author:
By Wiley Long – President, HSA for America – http://www.health–savings–accounts.com. HSA for America makes it easy to learn about and set up a Health Savings Account (HSA) that best meets your needs. Please link to this site when using this article.
Chance Gutterman
Learn How to Use Your Health Savings Account to Pay for Dental Expenses
o much for coverage and not having enough coverage may be a familiar scenario for many of the residents in America. Not many health insurance companies offer policies with coverage that will give you dental, eye and alternative care. Americans are spending over $30 billion annually just for dental services and most of it is out of their own pocket. The prices for dental care can be very horrid, ranging between $850 to $1,000 for crowns, $150 for check-ups and cleaning and thousands of dollars for oral surgery.
Most of the dental plans available are expensive – the reason being that the insurance companies know that the individuals who purchase dental coverage already have dental problems and will definitely be using the coverage. This is also known as “adverse selection”.
Another option is available today with the HSA, or Health Savings Account. This is an account that you can use to accumulate tax-free dollars for medical bills that aren’t covered under your High Deductible Health Plan, or HDHP. It is required that you are enrolled in a High Deductible Health Insurance Policy to qualify for an Health Savings Account. These plans have high annual deductibles, but you receive low monthly premiums in exchange. Since the money in the HSA is tax-free, the account holder can funnel their dental expenses through the HSA for a tax write-off.
If you decide to get a health plan with dental coverage, the deductible cannot be paid for with the HSA, but the expenses rendered from services can. Since you’ll be funding your account with pre-tax money, you can easily save $600 or more off the costs of your family’s yearly dental expenses by paying for the charges from your Health Savings Account.
There are some other options for dental coverage available. With prepaid dental plans you will be charged low monthly fees, which are usually around $7/month for individuals and $16/month for families. The plans give you significant discounts on check-ups, fillings, extractions and other dental services provided by a network dentist. Some plans help with the expenses for eyeglasses and contact lenses. Since these plans aren’t insurance, it can be paid for with the HSA. When calculating what medical expenses will be reimbursed from your HSA, include dental fees and premiums from the prepaid dental plan.
More About Health Savings Accounts
Any health expenses that aren’t covered under you HDHP can be paid for with your HSA, such as deductibles, eyewear and dental care. As long as the bill you are trying to cover was needed for a health problem, it can be paid for. So if you decided to get a massage while at the spa – this wouldn’t be covered, but if your doctor recommended that you go to a masseuse after a painful accident; this would be covered. Having a Health Savings Account is the way health insurance should be – you get to choose what medical help you receive for your health conditions.
This means if you decide to get alternative medicine instead of going to an allopathic physician (conventional doctors that use prescriptions drugs and other treatments for quick-fixes instead of delving to the root of the problem), you can do so and have the expenses paid with your Health Savings Account.
What is Considered an “HSA Qualified Expense”?
The definition of qualified medical expenses is only partially given in IRS Publication 502 and through different federal court rulings. There are few restrictions – as long as the expenses are for medical treatments or prevention for a health problem. For instance, yoga wouldn’t be identified as a medical expense unless your doctor recommended it as a treatment for medical reasons, such as for physical therapy after an injury, then it is qualified as a medical expense.
Many may question why the government would give a tax deduction for someone using some crazy vibration machine to cure their cancer. Again, the HSA is how health insurance should be. You should get to choose what treatments would best benefit your health condition. This gives account holders that power to manage their health as they see fit. Health Savings Accounts are encouraging individuals to take personal responsibility of their health care while loosening the monopoly traditional health care has had over the past couple of decades.
By: Wiley Long
About the Author:
Most of the dental plans available are expensive – the reason being that the insurance companies know that the individuals who purchase dental coverage already have dental problems and will definitely be using the coverage. This is also known as “adverse selection”.
Another option is available today with the HSA, or Health Savings Account. This is an account that you can use to accumulate tax-free dollars for medical bills that aren’t covered under your High Deductible Health Plan, or HDHP. It is required that you are enrolled in a High Deductible Health Insurance Policy to qualify for an Health Savings Account. These plans have high annual deductibles, but you receive low monthly premiums in exchange. Since the money in the HSA is tax-free, the account holder can funnel their dental expenses through the HSA for a tax write-off.
If you decide to get a health plan with dental coverage, the deductible cannot be paid for with the HSA, but the expenses rendered from services can. Since you’ll be funding your account with pre-tax money, you can easily save $600 or more off the costs of your family’s yearly dental expenses by paying for the charges from your Health Savings Account.
There are some other options for dental coverage available. With prepaid dental plans you will be charged low monthly fees, which are usually around $7/month for individuals and $16/month for families. The plans give you significant discounts on check-ups, fillings, extractions and other dental services provided by a network dentist. Some plans help with the expenses for eyeglasses and contact lenses. Since these plans aren’t insurance, it can be paid for with the HSA. When calculating what medical expenses will be reimbursed from your HSA, include dental fees and premiums from the prepaid dental plan.
More About Health Savings Accounts
Any health expenses that aren’t covered under you HDHP can be paid for with your HSA, such as deductibles, eyewear and dental care. As long as the bill you are trying to cover was needed for a health problem, it can be paid for. So if you decided to get a massage while at the spa – this wouldn’t be covered, but if your doctor recommended that you go to a masseuse after a painful accident; this would be covered. Having a Health Savings Account is the way health insurance should be – you get to choose what medical help you receive for your health conditions.
This means if you decide to get alternative medicine instead of going to an allopathic physician (conventional doctors that use prescriptions drugs and other treatments for quick-fixes instead of delving to the root of the problem), you can do so and have the expenses paid with your Health Savings Account.
What is Considered an “HSA Qualified Expense”?
The definition of qualified medical expenses is only partially given in IRS Publication 502 and through different federal court rulings. There are few restrictions – as long as the expenses are for medical treatments or prevention for a health problem. For instance, yoga wouldn’t be identified as a medical expense unless your doctor recommended it as a treatment for medical reasons, such as for physical therapy after an injury, then it is qualified as a medical expense.
Many may question why the government would give a tax deduction for someone using some crazy vibration machine to cure their cancer. Again, the HSA is how health insurance should be. You should get to choose what treatments would best benefit your health condition. This gives account holders that power to manage their health as they see fit. Health Savings Accounts are encouraging individuals to take personal responsibility of their health care while loosening the monopoly traditional health care has had over the past couple of decades.
By: Wiley Long
About the Author:
By Wiley Long – President, HSA for America ( http://www.Health–Savings–Accounts.com ) – The nation’s leading independent health insurance firm specializing in individual and family coverage that works with Health Savings Accounts.
Rex Krawiec
Learn How Managing Health Savings Accounts Can Save You Money
vings Accounts consist of two parts – the HSA bank account, and the high deductible health plan (HDHP). By carefully choosing which bank you use to establish your HSA, and strategically choosing how to fund your account and manage your investment, you will be able to get the most return on your money while keeping your expenses to a minimum.
Make Sure to Establish Your Health Savings Account
By switching from a conventional copay health insurance plan to a high-deductible health insurance plan (HDHP), most people are cutting their health insurance costs by about 40% or so. This is such a big savings, that many people neglect to take the next step and set up their HSA. But this is a financial mistake that is costing them money.
Unless you pay no income tax and have zero medical expenses (including dental, over-the-counter medications, or charges for alternative care like chiropractic or acupuncture), you will absolutely save money by establishing your HSA.
Run All Your Medical Expenses Through Your HSA
Not everyone feels like they have “extra” money that they afford to set aside in their HSA, despite the tax savings and other financial benefits. Even if that’s the case, you should still establish your HSA. Every time you incur a medical expense, deposit at least as much money as you spent on that medical expense. For instance, if you went to the dentist and it cost $85, put $85 in your HSA. If you like you can then take it right back out.
What this does is convert this medical expense into a tax-deductible expense. Then when you file your taxes next year, you can put the total amount that you ran through your Health Savings Account on line 25 of your 1040, and deduct it from the total income you report.
Cover Your Deductible
Your next step is to get enough money in your HSA to cover your deductible. For 2008, deductibles start at $1,100 and go up to $5,600 for individuals, and $2,200 to $11,200 for families. Annual contribution limits are $2900 for individuals, and $5800 for families. So it could take a few years to save enough money in your account to cover your deductible.
Once this money is in your HSA, you will have the confidence of knowing that you can cover most any medical expense that comes your way, particularly if you have a health insurance plan that pays 100% after your deductible.
As you continue to build money in your account, you may want to consider switching to a health insurance plan with an even higher deductible, which will further lower your premiums.
Minimize the Fees You Pay
If you will be using your HSA to pay medical expenses as you incur them, you should keep an eye on the fees your bank charges. Until you have enough money in your account to cover any fees with investment returns, you probably want to have your HSA with a bank that charges no fees. (Several are listed on the website referenced above).
If you plan to access money from your Health Savings Account to pay ongoing medical expenses, you may wish to keep a portion of your Health Savings Account money in a short-term CD or savings account. But to take maximum advantage of your Health Savings Account, you’ll want to eventually move some of the funds to investments that have a higher potential return.
Investment Options
No other investment has the triple tax-advantage that Health Savings Accounts offer. Not only is your deposit tax deductible, and your withdrawals to cover medical expenses tax-free, but your investment also grows tax-deferred.
Taking advantage of tax-deferred growth is one of the best ways to build long-term savings. Some banks will provide a short list of mutual funds you can invest in, while others provide access to an online discount brokerage such as Ameritrade where you can choose from stocks, bonds, mutual funds, and more.
The most aggressive strategy is to pay your medical expenses from somewhere other than your HSA, and save the receipt. You can then reimburse yourself at a later date. The additional growth you get from not paying any taxes on your investment may be enough to cover all your medical expenses.
By: Wiley Long
About the Author:
Make Sure to Establish Your Health Savings Account
By switching from a conventional copay health insurance plan to a high-deductible health insurance plan (HDHP), most people are cutting their health insurance costs by about 40% or so. This is such a big savings, that many people neglect to take the next step and set up their HSA. But this is a financial mistake that is costing them money.
Unless you pay no income tax and have zero medical expenses (including dental, over-the-counter medications, or charges for alternative care like chiropractic or acupuncture), you will absolutely save money by establishing your HSA.
Run All Your Medical Expenses Through Your HSA
Not everyone feels like they have “extra” money that they afford to set aside in their HSA, despite the tax savings and other financial benefits. Even if that’s the case, you should still establish your HSA. Every time you incur a medical expense, deposit at least as much money as you spent on that medical expense. For instance, if you went to the dentist and it cost $85, put $85 in your HSA. If you like you can then take it right back out.
What this does is convert this medical expense into a tax-deductible expense. Then when you file your taxes next year, you can put the total amount that you ran through your Health Savings Account on line 25 of your 1040, and deduct it from the total income you report.
Cover Your Deductible
Your next step is to get enough money in your HSA to cover your deductible. For 2008, deductibles start at $1,100 and go up to $5,600 for individuals, and $2,200 to $11,200 for families. Annual contribution limits are $2900 for individuals, and $5800 for families. So it could take a few years to save enough money in your account to cover your deductible.
Once this money is in your HSA, you will have the confidence of knowing that you can cover most any medical expense that comes your way, particularly if you have a health insurance plan that pays 100% after your deductible.
As you continue to build money in your account, you may want to consider switching to a health insurance plan with an even higher deductible, which will further lower your premiums.
Minimize the Fees You Pay
If you will be using your HSA to pay medical expenses as you incur them, you should keep an eye on the fees your bank charges. Until you have enough money in your account to cover any fees with investment returns, you probably want to have your HSA with a bank that charges no fees. (Several are listed on the website referenced above).
If you plan to access money from your Health Savings Account to pay ongoing medical expenses, you may wish to keep a portion of your Health Savings Account money in a short-term CD or savings account. But to take maximum advantage of your Health Savings Account, you’ll want to eventually move some of the funds to investments that have a higher potential return.
Investment Options
No other investment has the triple tax-advantage that Health Savings Accounts offer. Not only is your deposit tax deductible, and your withdrawals to cover medical expenses tax-free, but your investment also grows tax-deferred.
Taking advantage of tax-deferred growth is one of the best ways to build long-term savings. Some banks will provide a short list of mutual funds you can invest in, while others provide access to an online discount brokerage such as Ameritrade where you can choose from stocks, bonds, mutual funds, and more.
The most aggressive strategy is to pay your medical expenses from somewhere other than your HSA, and save the receipt. You can then reimburse yourself at a later date. The additional growth you get from not paying any taxes on your investment may be enough to cover all your medical expenses.
By: Wiley Long
About the Author:
By Wiley Long – President, HSA for America ( http://www.health–savings–accounts.com ) – The nation’s leading independent agency specializing in individual and family health insurance coverage that works with Health Savings Accounts.
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