June 30, 2005
Stay Healthy, Get Wealthy with Health Savings Accounts
Health Savings Accounts (HSAs) appeal to forward thinking people. "A lot of the health care cost in America today is driven by wasted cost that need not be incurred if people took better care of themselves and truly understood the consequences of their health-related decisions."
This is a quote from a guy named Bigalke with the accounting firm Deloite & Touche. But it doesn't take an accountant to understand that if you take better care of yourself and are more proactive concerning your health, you won't spend as much money on medications, doctor visits, and hospitalization. Not only that, but you'll feel a lot better!
If a person under 45 fully funds their Health Savings Account every year, they have the potential to accumulate hundreds of thousands of dollars in their HSA. But it won't happen if they get sick and have to spend all the money.
Health Savings Accounts tend to appeal to people who are forward thinking, who look forward to the future, and anticipate having more money because of what they have saved on their health insurance, and accumulated in their HSA account.
For most Americans, the Grim Reaper is going to come in the form of heart disease, cancer, diabetes, or some form of dementia in which the body is still alive but the mind is gone. Fortunately for those who take a proactive approach, the latest science indicates that at least 80% of cancer is preventable, and at least 90% of all dementia and diabetes is preventable. Heart disease is almost 100% preventable, using strictly lifestyle and nutrition. The same goes for arthritis, osteoporosis, and most other diseases that strike the "elderly".
More and more people are finally discovering that no one will take care of their future, other than themselves. Those who do take responsibility now will reap the benefits of good health and financial independence in their retirement years. In future posts, I'll cover strategies to help you stay young and healthy, so you can enjoy the tax-deferred wealth accumulation your Health Savings Account will bring.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 10:10 AM | Comments (0)
June 29, 2005
A New Kind of Health Savings Account
The Florida legislature has approved a measure that would allow citizens to set up tax-free Hurricane Savings Accounts. They work like a Health Savings Account (HSA), but instead of allowing you to spend the money tax-free to pay for medical expenses, you can pay for hurricane and related expenses.
As your account grows, you can comfortably buy higher deductible (less expensive) insurance. Any money not used to pay for hurricane-related expenses is still yours, just like with an IRA or 401k.
For too long, the government penalilzed savers and investors by taxing their income before they even save any of it, and then taxing any return they earn on it. I'm glad to see the tax-code rewarding those who save for the future. An ownership society with less dependence on government handouts or Social Security is a betteer society, without question. The Florida legislature is now pushing for the federal government to give tax deductions on this program, and I wish them luck.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 10:34 AM | Comments (0)
June 28, 2005
The Benefits of an Unfunded Health Savings Account
Some individuals may choose to purchase a qualifying high deductdible health insurance plan (HDHP), but not fund a Health Savings Account (HSA). What would be the point in that you ask?
Here are the benefits:
Lower premiums - Individuals can take advantage of a HDHP without having to open an HSA. High deductible plans are much more affordable than typical insurance policies.
Features - Clients who are unable to fund an HSA can still get the features of an HDHP, such as a family aggregate deductible.
Post-claim account funding - Some people may not want to fund their HSA right away, but wait until you have a medical expense. That way, instead of paying the medical bill directly out of your pocket, you first put the money in the HSA, then take it out to pay for (or reimburse yourself for) the medical bill. The expense then becomes tax deductible, knocking a large percentage off of your healthcare expenses, but without requiring the upfront cash needed to fully fund your Health Savings Account.
Someone who does this misses out on the tremendous tax savings opportunity that HSAs provide, but can still end up with much lower health costs than if they chose a traditional health insurance policy without an HSA.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 10:26 AM | Comments (0)
June 27, 2005
Health Savings Accounts Promote Smart Spending on Prescription Drugs
When you have a Health Savings Account (HSA), you pay for initial expenses like doctor visits and prescription drugs yourself, from your health savings account. So it makes sense to spend your money wisely, something you don’t have to worry about if you’ve got a traditional plan with copays for prescriptions.
One technique is to purchase double-strength medications, and then cut the pills in half yourself. Recently the nation’s second largest health insurer, United Healthcare, got behind this practice, offering half-price on drugs for those who split double-strength pills. They’re even giving away pill splitters, and providing advice on which pills can be safely cut in half.
If you have a health savings account, make sure to remember to let your doctor know. Often they prescribe the latest version of a drug almost identical to older, equally effective drugs, simply because the drug rep has been promoting it. Explain that your paying for your drugs out of your own HSA, and that the more money you can leave in the HSA, the greater your potential retirement account will be. This will get his or her attention, and an intelligent decision can be made concerning the prescription that makes the most sense.
He’ll also probably ask you about HSAs. Tell him to give us a call.
Posted by Wiley Long at 07:02 AM | Comments (1)
June 26, 2005
$132 Million in Golden Rule Health Savings Accounts
Just 18 months after health savings accounts (HSAs) became available by law, Golden Rule Health Insurance has announced that 40 percent of its customers are choosing an HSA over more traditional health insurance plans.
Golden Rule also confirmed that its customers have accumulated more than $132 million in their tax-advantaged savings accounts - strong evidence that the accounts are working the way HSA proponents intended they would.
Having an extra $132 million in HSA deposits should help enable Golden Rule to keep its health insurance premiums low. The company has very competitive rates in most markets, and recently introduced a lower-cost "Saver" plan, that does not cover outpatient doctor visits. As an example of how low the premiums are, a young family of four living in Ohio or Arizona or Michigan who chooses a Golden Rule Saver HSA plan with a $5,250 annual family deductible might have a monthly base premium of well under $200.
HSAs pair a lower-cost high deductible health savings plan with a tax-favored savings account. Money saved on the reduced insurance premiums can be placed into the savings account and withdrawn tax free to pay the insurance deductible and other qualified medical expenses, including vision and dental care.
Policy-holders can place their funds with any number of HSA Administrators. I'm sure many Golden Rule customers have chosen to place their funds with Golden Rule because it is convenient, and because Golden Rule is currently paying 4%, one of the highest rates available for HSAs that are placed in savings accounts. Other administrators also offer various investment options as well, a list of which can be seen on our HSA Administrators page.
Posted by Wiley Long at 11:30 AM | Comments (0)
June 25, 2005
High Carb Diet Related to Cataract Risk
Because any funds in a Health Savings Account (HSA) that are not withdrawn to pay medical expenses continue to grow tax-deferred, an account-holder who stays healthy and uses less of their HSA money can end up with dramatically more funds in their account when they retire. One of the most powerful dietary strategies to reduce your risk of diabetes, heart disease, and other degenerative disorders is to limit the amount of high-glycemic carbohydrates you eat. Sugar, rice, pasta, bread, and other high-carbohydrate foods cause increased blood sugar and insulin levels, which appear to promote many different health problems, including cataracts.
A study was just published in the American Journal of Clinical Nutrition that compared incidence of cataracts in middle-aged women to the carbohydrate content of the food they ate. 17.2% of all Americans over age 40, an estimated 20.5 million people, have cataracts. Lens clouding begins months or even years before vision is affected. The main hypothesis is that the soluble proteins in the lense begin to "cross-link" by reacting with sugars and each other, eventually forming clumps that precipitate out of solution.
It appears that higher carbohydrate intakes and plasma concentrations of glucose result in chronically enhanced exposure of lens proteins to glucose. And sure enough, this study found that the women who ate the highest levels of carbohydrates had higher rates of cataracts.
More and more evidence continues to pile up showing that the high-carbohydrate diet that has been promoted by the establishment as "healthy", really is not. High levels of carbohydrates, such as found in sugar, grains, and potatoes, lead to quite a few health problems. Cataracts are just one of many - we'll talk about more later.
Posted by Wiley Long at 10:32 AM | Comments (0)
June 24, 2005
Health Savings Accounts appeal to forward thinking individuals
By choosing a Health Savings Account (HSA), one is betting on themselves, in a way. If you stay healthy, then with a typical health insurance plan you’re just out a lot of money. With an HSA, not only did you pay significantly less in premiums, but at the end of the year you have a nice deposit of up to $5,150 sitting in your account. Money on which you didn’t pay federal income taxes, state income taxes (with the exception of about six states), or social security taxes.
Let’s say a 30-year old man with a family opens an HSA, and has a medical savings plan that allows him to fund the account with $5,250 each year. If he takes $1,000 or less out each year for medical expenses, he’ll have $1,124,751 when he retires. (You can do your own calculations with our HSA Future Value Calculator).
The best way to do this is to stay healthy, so that you don’t need to access those funds to pay for medical expenses. The good news is that the vast majority of diseases and disorders people have are the direct result of their lifestyle choices. High blood pressure, cancer, diabetes, Alzheimers, digestive disorders, endometriosis, osteoarthritis, osteoporosis, and more, are all largely preventable.
The average guy doesn’t get it.
The average American lives as if social security, a few prescriptions, and some good luck will take care of him in his later years. So he saves little for retirement. He eats packaged foods like French fries, chips, cokes, pasta, and cold cuts. And over the years he puts on “a few extra pounds”, and he gets out-of-shape, and he gets high blood pressure, and high cholesterol, and eventually heart disease, cancer, diabetes, or Alzheimers.
Insurance companies get it.
Insurance companies do understand the tremendous impact lifestyle can have on health, and are beginning to institute programs to encourage healthy lifestyles among their customers. Healthy policyholders will use their coverage less, resulting in lower rates for them, and better customer retention and higher profitability for the insurance company. Pacificare and its subsidiary American Medical Security have just instituted a new program called HealthCredits, designed to help reward its customers for staying healthy. The online program provides a health risk assessment, a personalized health-improvement plan, email access to trainers, counselors, and nutritionists, and even credits that can be redeemed for health-related merchandise.
HSA owners get it.
People who open Health Savings Accounts are proactive. They act ahead of time, and think about how their actions now will affect their future. That is why they put away tax-deferred money for future possible health expenses, and that is why I think many are also interested in taking a proactive approach to their health. So in addition to talking about HSAs on this blog, I will also be giving information and tips about how to be optimally healthy. Choosing to live an extraordinarily healthy life, and actively making changes, is an activity that will bring tremendous returns. Tax-free, just like an HSA.
Posted by Wiley Long at 11:03 AM | Comments (0)
June 23, 2005
Consumer-directed Health Savings Account Plans
A new survey of more than 2,500 people with consumer-directed health savings account plans was conducted by consultants McKinsey & Co. Consumer-directed health plans are those that have higher deductibles, in which the consumer is paying for the initial expenses, while the insurance company pays for the larger expenses. These plans are often paired with a health savings account in order to take advantage of tax-deductible contributions.
Critics have said HSA plans would result in people skimping on basic health care. Instead, the survey showed participants in these plans got annual check-ups, basic lab tests, prostate screenings and mammograms at the same rate as those with more traditional copay plans.
Another finding was that these individiuals were 50 percent more likely to ask their providers about cost. Only when doctors and hospitals come public with their costs will the consumer be able to shop and find the best value. You can bet some of the healthcare providers aren't too happy about this development.
Another interesting fact from this survey was that owners of consumer-directed health savings account plans were 20 percent more likely to carefully follow their doctor's advice and treatment regime. Maybe there's just a little more incentive to stay healthy when you're paying for the drugs and doctor visits out of your own pocket.
Posted by Wiley Long at 08:40 AM | Comments (0)
June 22, 2005
HSA Bank Offers Cost Management Option
HSA Bank is one of the more popular Health Savings Account Administrators used by our clients at HSA for America, primarily due to the many investment options they offer. Yesterday they announced a cost management option for their accountholders through a relationship with My Medical Control, a consumer-directed medical claim cost management company.
HSA Bank's accountholders can choose to have their medical bills reviewed after their health plan has processed their claims and before they pay the medical providers from their Health Savings Account. My Medical Control uses a pricing database to ensure that accountholders are paying the lowest, most competitive price for their medical treatment. When applicable, the My Medical Control staff will intervene directly with the provider and settle a claim.
With the cost management option, the accountholder does not directly pay the claim cost management service. Rather, My Medical Control receives a portion of the savings negotiated for the claim. By using this service, HSA Bank accountholders may save a substantial amount of money, at no risk or cost. We applaud HSA Bank for adding this benefit which will help further stretch your Health Savings Account dollar.
Posted by Wiley Long at 09:37 AM | Comments (0)
June 21, 2005
New Health Care Bill works with Health Savings Accounts
H.R. 1872, the Health Coverage for the Uninsured Act of 2005, was recently introduced in Congress. It builds on the foundation of a previously-passed law that established Health Savings Accounts (HSAs), allowing individuals with high-deductible insurance to set aside tax-free savings for lifetime health-care needs.
Following are 3 main features of the bill:
1. Premium deductibility. The legislation would allow an individual who purchases a high-deductible health plan (HDHP) combined with an HSA and does not receive health insurance through their employer (or any government program) to deduct from his or her taxable income the amount of the premium. Currently only businesses and self-employed individuals can deduct the cost of their health insurance, while other individuals who purchase their own health insurance are still taxed on those premiums. This eliminates this unfair tax bias in current law against individuals who purchase their own health-care coverage.
2. Small business tax credit. Under this proposal, small businesses of up to 100 employees would receive a refundable tax credit for contributions they make to their employees' health savings accounts (up to $200 for a contribution into an individual HSA or $500 for a family HSA.) In order to be eligible for the credit for contributions to HSAs, the employer must offer a group HDHP. This will encourage businesses to offer their employees HSAs, and to help fund those HSAs.
3. Low-income tax credit for the purchase of health insurance. This legislation provides a subsidy of up to 90% of the cost of the health insurance premium - up to $1,000 for an individual or up to $3,000 for a family plan. This credit would be refundable, advanceable, and assignable - meaning the money could go straight to the insurer of their choice to pay for their health care, on a monthly basis. This would make health insurance more affordable for low-income people.
These are all good proposals that will encourage growth of HSAs. As more and more people own HSAs, their will be greater demand in the health care marketplace for price-transparency. Individuals who are spending money from their Health Savings Account will want to know how much a doctor charges, how much a prescription drug costs, and what their choices are. This will result in more competition among healthcare providers, and lower costs for everyone.
My company, HSA for America, supports this legislation, and I encourage everyone to write their Congressional representative, asking them to support it as well.
Posted by Wiley Long at 10:02 AM | Comments (0)
June 20, 2005
Health Care in the 21st Century with Health Savings Accounts
With Health Savings Accounts (HSAs), consumer-driven health care has the potential to be a powerful force of change in the health care system. By instituting competitive pressures, encouraging greater price transparency, and rewarding consumers who are proactive about their health, the growing adoption of Health Savings Accounts will help make health care more affordable for everyone.
In an article entitled “Health Care in the 21st Century”, published in the New England Journal of Medicine on January 20, 2005, Senate Majority Leader Bill Frist, M.D., made several suggestions on ways to provide all Americans with lifelong, affordable access to high-quality health care. Senator Frist graduated from Harvard Medical School in 1978, and was a surgeon before entering politics. One of the key aspects of his vision is a system that is responsive primarily to individual consumers, rather than to third-party payers. This concept is known as consumer-driven health care.
Today most health care is paid for and controlled by third parties such as the government, insurers, and employers. Consumers rarely compare prices or quality of service when shopping for health care – partly because this comparison is usually very difficult or even impossible, and partly because the price often just doesn’t matter to the consumer, who is only responsible for a moderate co-payment. Frist notes “a consumer-driven system will empower all people – if they so choose – to make decisions that will directly affect the most fundamental and intimate aspects of their life – their own health. This empowerment gives people a greater stake in and more responsibility for, their own health care. Health care will not improve in a sustained and substantial way until consumers drive it.”
A key aspect to enabling consumer-driven health care was the creation of tax-free Health Savings Accounts (HSAs). This legislation was part of the Medicare Modernization Act (Public Law 108-173). “HSAs, coupled with affordable high deductible insurance policies, give individual consumers more control over their health care choices and hard earned dollars. HSAs give people a greater stake in their own health care. The accounts can move with employees from job to job and can be rolled over year to year. HSAs should increase demand for greater information and transparency.”
What Senator Frist is suggesting is that people with high deductible health insurance plans and HSAs have incentive to keep their health costs low, since any money they save on health care expenses stays in their Health Savings Account, and grows tax-deferred, like an IRA. Thus there is also incentive for the consumer to demand information about health care pricing. No system has yet been devised in the history of mankind that does more to increase quality and lower prices than a competitive market system. As more and more consumers begin to own health savings accounts, health care providers will be forced to compete for their business by providing better quality service and better prices.
The other factor in play is the financial motivation the individual will have to stay healthy. The vast majority of health care spending today is due to degenerative diseases such as high blood pressure, diabetes, metabolic syndrome, cardiovascular disease, and other modern ailments that are primarily the result of lifestyle choices. The consumer who wisely spends his HSA dollars on preventative care (which can be done tax-free) and pays attention to diet and exercise could be rewarded with a substantial amount of money in their Health Savings Account by age 65.
Consumer-driven health care has the potential to be a powerful force of change in the health care system. By instituting competitive pressures, encouraging greater price transparency, and rewarding consumers who are proactive about their health, the growing adoption of Health Savings Accounts will help make health care more affordable for everyone.
Posted by Wiley Long at 07:00 PM | Comments (3)