Health Savings Accounts

archangel said:
I'm not fighting with anyone..clay is fighting himself on this one...I no longer give into the urge to respond to his baiting...da 'thats all folks!' :tng:
You resist the urge to respond by responding? Interesting tactic.
 
Well, let's get back to Manu's interesting topic of health savings accounts. Recently I read an interesting article on this topic. It said GM and Wal-Mart both had implemented the use of HSA's in their business operation, and the results had been totally unexpected. Far less abuse than under their regular health insurance programs, and many employees had enough $$$ left in their accounts at the end of the fiscal year to transfer over to the next year. I will try to find that article and bring it to the board for information. It's information like that that needs to be presented to people so they can make up their minds on this proposal. (If someone else read the same article and knows where to find it, feel free to go ahead and post it. I won't get in a snit about it.)
 
Adam's Apple said:
Well, let's get back to Manu's interesting topic of health savings accounts. Recently I read an interesting article on this topic. It said GM and Wal-Mart both had implemented the use of HSA's in their business operation, and the results had been totally unexpected. Far less abuse than under their regular health insurance programs, and many employees had enough $$$ left in their accounts at the end of the fiscal year to transfer over to the next year. I will try to find that article and bring it to the board for information. It's information like that that needs to be presented to people so they can make up their minds on this proposal. (If someone else read the same article and knows where to find it, feel free to go ahead and post it. I won't get in a snit about it.)
I didn't see or read about this, and don't know about these business HSAs.
In the individual HSA I have, all money left over rolls to the next policie year, regardless of the amount. In addition, it draws tax free interest as well.
 
From a CBS article called "Meet the HSA" with financial advisor Ray Martin:

http://www.cbsnews.com/stories/2004/09/24/earlyshow/saturday/main645522.shtml

Martin believes that high-deductible plans are going to become increasingly common as employers and the insurance industry figure out that they can save money by encouraging employees to use them.

Finally, because HSAs are so new, they will continue to evolve and may make sense for more people down the road.

Here are some things Ray Martin likes about HSAs:


Triple Tax-Free Savings: HSA contributions are an above-the-line deduction from income, and therefore reduce your income for federal, state and employment tax purposes. That means that HSAs allow for tax-exempt, tax deferred earnings on the savings in the HSA, and HSA withdrawals are tax-free when used for qualified medical expenses.


No "use-it-or-lose it" feature. An HSA is owned by the individual, and all amounts in an HSA are fully vested; unspent amounts remain in the account and grow with interest.


Encourages better medical services purchasing: When using their HSA savings to pay for medical expenses, consumers are more likely to compare the cost of medical services and verify billing amounts.


Save for tomorrow's medical expenses with today's dollars: HSAs allow individuals to do so when they are more likely to be able to save (young with more discretionary income).


Increases number of affordable health insurance options: Many people don't have health insurance because they can't afford it. These individuals will now have more lower-cost HDHP options to choose from and can now use an HSA to save and pay for expenses that are under the deductible.


HSA withdrawals can be used to pay for other medical coverage such as long-term care insurance premiums and Medicare Part B premiums with tax-free withdrawals.

One of Martin's concerns about the HSA is the "as long as" factor: "As long as your employer still offers to pay a set dollar amount towards your health insurance or other benefits, including the option to receive some of this in cash, and you enroll in the high-deductible health plan, open an HSA and your employer contributes the savings into the HSA, then HSAs will be a good deal for employees in this situation."

But Martin is skeptical about this happening over the long term ,as employers are under tremendous financial pressure to cut their costs of benefits. Allowing employees to opt for a high-deductible health plan and paying them the savings in cash does not, by itself, reduce an employer's costs for health insurance.

It's likely that employers will first offer high-deductible health plans and HSAs to their employees and see what the sign-up rate is. If it's a measurable number of employees, then, in later years, the employers probably will announce that they are cutting back what they pay towards health insurance costs for employees. So, if you want to keep funding your HSA at the same amount, you'll need to make up the difference out of your own income.

But this is not a reason to not sign up for an high-deductible health plan and HSA, because the trend of employers cutting back their contributions towards health insurance is well established, and it is safe to assume that this trend will continue for most employees.

Another concern of Martin's: The effect of adverse risk selection on health insurance overall.

Martin says that people who are low users of medical services (more likely to be young and very healthy) are more likely to sign up for HDHPs and those who are good savers (above-average income) are more likely to sign up for HSAs.

What will be the effect on those who stay enrolled in low-deductible health options? The logical answer is that the cost of insurance will soar (because those who use health services the most will be those who are in low-deductible health plans) and low-deductible health insurance plan premiums will rise so high, that individuals will be forced to convert to high-deductible health plans.
 

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