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July 28, 2005
Minnesotans Get Tax Break on Health Savings Accounts Contributions
The Governor of Minnesota will sign the State budget that was hammered out with the State legislature, making Health Savings Account (HSA) contributions tax deductible from Minnesota state income taxes.
Minnesota was one of only 9 states that did not allow a state income tax deduction on contributions to Health Savings Accounts. The federal government currently allows federal income tax deductions for contributions made to HSAs.
The tax-deductibility makes HSAs a very attractive choice for anyone who pays for their own health insurance. Because they have a higher deductible, HSA-qualified health insurance plans already have a much lower premium than traditional plans. When the tax savings are also computed into the equation, many individuals are cutting their health insurance costs by 80% or more.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 10:40 AM | Comments (1)
July 26, 2005
Baby Boomers Should Maximize their Health Savings Account Contributions
The first baby boomers, born in 1946, turned 59-1/2 on July 1 and are now eligible to retire. Unfortunately, many aren’t even close to being financially prepared for this event. Health Savings Accounts (HSAs) can help.
The years fly by quickly, and retirement can be here before we know it. In addition to maximizing your IRA or 401k contributions, an important tool for maximizing your retirement income is to open a Health Savings Account.
HSAs give you a tax deduction for contributions to the account, just like an IRA. However, unlike an IRA, money can be withdrawn from the account tax-free to pay medical expenses. Most financial experts recommend fully funding your HSA before funding any other retirement accounts, precisely because this is the only account that allows tax-free withdrawals.
The last of the baby boomers were born in the early to mid-60’s, if I’m not mistaken. I’m one of them. So we’ve got 20 something years to continue to contribute to our retirement accounts. With some decent returns, it should be no problem for us to sail into our retirement years confident in our financial position.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 10:38 PM | Comments (0)
July 24, 2005
Health Savings Account owners need medical price transparency
Encouraging price transparency will be a big help to anyone who has a high deductible health insurance plan which is being covered by funds from their Health Savings Account (HSA).
After a car accident last August, Lisa Salvato's was having problems with her left hand. Following recommendations of her neurologist, she went in for outpatient therapy for strengthening exercises. When she asked the financial office what she could expect the expenses to be, she had a hard time getting answers. One woman wouldn’t tell her anything, and another said about $400.
The bills started coming after she had completed her 11th session, and that’s when she found out that the 45 minute exercise therapy sessions were costing $1560 for each time. After doing some asking around, she was able to find the same therapy, for only $50 per session.
Hospitals and doctors often don’t really want the patient to know how much they are being charged. Especially when they’re ripping the patient off.
Part of the appeal of Health Savings Accounts is that, by allowing the consumer to be involved in their healthcare decisions, these plans will put competitive pressure on healthcare providers to provide better service at a lower cost. Otherwise, the potential patient might go elsewhere.
The challenge with this concept is that it is still very difficult to learn about medical pricing. Some politicians would like hospitals to let customers know their prices prior to receiving treatment. A bipartisan bill introduced in the House of Representatives would require hospitals nationwide to reveal the prices of their 25 most common procedures. A measure passed last year by the Florida Legislature would make pricing of some procedures available.
However it happens, encouraging price transparency will be a big help to anyone who has a high deductible health savings plan which is being covered by funds from their HSA.
Posted by Wiley Long at 12:33 PM | Comments (0)
July 22, 2005
A Health Savings Account Seminar
HSA Trustee Services, a nationwide provider of Health Savings Accounts (HSAs), announces a seminar to be held at Hawk’s View Golf Club in Lake Geneva, WI on August 3.
Speakers will be Congressman Paul Ryan, co-sponsor of the HSA provision in the Medicare Bill that made these accounts available, speaking on the history and future of the program; Roy Ramthun, Special Assistant to the President for Economic Policy and formerly of the Treasury Department speaking on upcoming health care initiatives and changes to the program that will benefit both individuals and employers; Dan Perrin, publisher of HSA Insider and Beverly Gossage, top insurance agent and trainer with Olympic Financial Marketing in Kansas.
The half-day seminar will feature not only presentations but also an ample question and answer period and round table discussion. Breakfast and lunch are included with the HSA seminar, and golf is available following the seminar.
The seminar is geared toward small business owners, insurance agents, bankers and accountants. “It’s a perfect opportunity for financial professionals to invite their business clients to learn how to control health care costs” said Tim Morales, President of HSA Trustee Services. “We’re very proud to have the top speakers in the country on Health Savings Accounts participating in this event, and we know those attending will come away from the seminar with a wealth of useful information.
More information on the seminar can be found at www.hsaseminar.com, or by calling HSA Trustee Services at 262-248-9820.
Posted by Wiley Long at 09:40 AM | Comments (0)
July 20, 2005
Banks Compete for HSA Business in Washington
As Health Savings Accounts (HSAs) become more popular, more and more local banks are beginning to offer them. The Puget Sound Business Journal (http://www.bizjournals.com/seattle/stories/2005/07/11/story8.html?from_rss=1) reports that two local banks, Evergreen Bank and Wells Fargo, are competing for the Health Savings Account deposits of Washingtonians.
As most readers of this blog know, HSAs allow you to deposit up to $2,650 as an individual, or $5,200 as a family, into a tax-deductible account each year, which can then be used to pay medical expenses. Any money not spent grows tax-deferred like an IRA, and can be used as an additional retirement account.
Wells Fargo has opened about 2,000 HSAs in the state of Washington so far. Evergreen Bank, new to HSAs, has only opened 20 so far. Both banks expect deposits to grow rapidly as more and more people choose HSAs for their healthcare needs.
For a list of nearly 20 HSA administrators, I invite you to visit http://www.health--savings--accounts.com/admins.htm. On this site we list our favorite places to invest your HSA funds, and let you easily compare fees and interest rates.
Posted by Wiley Long at 09:42 AM | Comments (0)
July 18, 2005
Health Savings Accounts are a good option for Alternative Lifestyles
Matthew Veritas Tsien, Vice-President of Development for the Florida Gold Coast Log Cabin Republicans, recently wrote an article urging gay men to choose Health Savings Accounts (HSAs). (http://www.mountainpridemedia.org/oitm/issues/2005/07jul2005/views04_tsien.htm)
Tsien points out that, although a majority of gay men are Democrats and likely to vote for a big-government socialized medicine solution, big government answers just don't work. Medicare's total unfunded liability currently stands at $65.4 trillion (with a T!), and the Social Security and Medicare Boards of Trustees has warned that the trust fund will evaporate by 2020. Having the federal government take over the entire system isn't going to help this situation any.
He points out that, in addition to offering much lower health insurance premiums, HSA plans have several other advantages. One is that with an HSA the consumer has more motivation to scrutinize medical costs. Currently, people tend to pay more attention to the costs of of a new shirt than they do the costs of medical care, because they have no incentive to compare prices.
The benefit that HSAs offer gay men (along with everyone else) is an incentive to stay healthy. Because funds deposited in an HSA always remain the property of the account holder, any funds not used to pay medical expenses can be spent on anything.
Finally, Tsien points out that HSA funds are not restricted in the way PPOs and HMOs control medical expenses. Very few traditional health insurance plans offer any coverage for acupuncture, herbal medicine, doctor-recommended nutritional supplements, or any other alternative treatments. The owner of an HSA can spend the money in their HSA account on virtually any type of medical expense, tax-free.
Posted by Wiley Long at 04:07 PM | Comments (0)
July 16, 2005
Health Savings Accounts are best Retirement Vehicle
Jay Coldwell, product director for Wausau Benefits, was recently quoted in an article in Employee Benefit Advisor as saying “I think the best use of a Health Savings Account (HSA) is as a retiremenet accumulation vehicle because it’s the most tax-advantaged vehicle. Everyone will need significant assets to pay for health care in retirement.”
This is the great advantage HSAs have over other retirement vehicles like IRAs. Though they both can grow tax-deferred, only HSAs allow you to spend the money without paying taxes when you make your withdrawals. The only catch is that the expenses must be medically related. Since so many medical expenses tend to happen once people do reach “old age”, a good portion of your HSA funds may be withdrawn tax-free. If you do have to pay taxes on your withdrawal, it just means you aren’t needing the money for medical expenses. This is a win-win situation for you.
Posted by Wiley Long at 10:16 AM | Comments (0)
July 14, 2005
HSA Bank declares $200 Million in Deposits
HSA Bank just announced they signed up more new accounts in the first five months of 2005 than they did during all of 2004. This is just another reflection of the growing popularity of Health Savings Accounts (HSAs).
HSA Bank is one of the administrators we recommend at HSA for America. They are the nation's leading administrator, with over 116,000 HSA accounts. They also have over $200 million in deposits, more than three times that of any other administrator.
They got this tremendous lead partly by being in the game much longer than many of their competitors. Before HSAs became available in the beginning of 2004, Medical Savings Accounts were available. They were similar, but not very popular because of limitations on who could open one, and how many people could have one. So the vast majority of HSA Bank's deposits have no doubt accrued over the past year and a half. This therefore represents nearly $200 million in income that depositors did not have to pay taxes on - quite a significant chunk of change, if you ask me.
Posted by Wiley Long at 10:05 AM | Comments (0)
July 12, 2005
Health Savings Accounts, Roth IRAs, 529 Plans - All Reduce Tax Burden
With a Health Savings Account (HSA), Roth IRA, and a 529 College Savings Plan, you can reduce your tax burden. Most people have no idea that it is possible to legally shelter income from income taxes. Oh sure, you can defer taxes, but can you really avoid paying taxes all-together?
As I talk about all the time on this blog, Health Savings Accounts enable you to put away tax-deferred money, which if ever spent on medical expenses is still tax-free. Roth IRAs allow you to put away money after taxes, but then you never pay taxes on it again, regardless of what you spend it on. And 529 College Savings Plans allow you to get tax-deferred growth if the money is spent for college tuition.
The impact that this can have on one's finances is tremendous. Of these three, only HSAs give you both a tax-deduction when you deposit the money into your account, and allow you to take the money out later without paying taxes on it. The only catch is that the money must be spent for qualified medical expenses. Considering that you can wait to spend the money for medical expenses when you are elderly, or even for long-term care insurance, this shouldn't be much of a concern.
Posted by Wiley Long at 10:01 AM | Comments (0)
July 11, 2005
Health Savings Accounts for Everyone in Wisconsin
A bi-partisan bill proposed in the state of Wisconsin will set up a Health Savings Account (HSA) for every adult in the state. This is actually part of a government sponsored health plan, in which all Wisconsin residents will receive a “Premium Credit” which they can use to purchase health insurance from competing, qualifying health insurance policies.
All Wisconsin residents (under age 65) will own a Health Insurance Purchasing Account; and a Health Savings Account funded at $600 per year. There is an annual deductible of $1,200 and co-insurance or co-pays for medical and hospital care, for prescription drugs, and for non-emergency use of hospital emergency rooms. There is an annual out-of-pocket maximum of $2,000.
The funds to cover this would allegedly come from an employer paid assessment. The interesting thing is that even though this is a quasi-governmental medical insurance program, it is much different from a typical system of socialized medicine. Competition is build into the system by allowing competing insurance plans, and consumerism is introduced by allowing Health Savings Accounts. These two features motivate people to find the best way to spend their healthcare dollar, and reward those who stay healthy by enabling them to build a nest egg in their HSA.
Posted by Wiley Long at 09:58 AM | Comments (0)
July 09, 2005
Health Savings Accounts are the Obvious Choice for the Self-employed
According to an article in Forbes magazine, Health Savings Accounts (HSAs) are becoming the obvious choice for the self-employed.
Stephen Parente, an assistant professor at the University of Minnesota's Carlson School of Management, recently reviewed individual health insurance offerings throughout the U.S. and found that "in some cases the premiums for high-deductible plans are so much cheaper that buyers can fund almost the entire deductible with their premium savings."
Of course, we’re selling HSA-qualified health insurance plans every day at HSA for America, so the advantages of Health Savings Accounts are obvious to us. Rates vary tremendously based on age, zip code, insurance company, deductible and plan choice. When I look at rates with Blue Cross Blue Shield for my family, a $500 deductible traditional plan will cost $566/month. If I instead go with a $5,000 deductible HSA plan, my premium will be $259/month. So I’m saving in premium $3,600 of the $4,500 difference in deductible. Also, the HSA plan gives me a family deductible, while with the other plan each member of my family must meet the deductible.
We've noticed another interesting money fact: some people can actually pay for their premium with their tax savings. If I put $5,000 into my HSA each year, and I'm in a 28% tax bracket, I’ll save over $1,500 in taxes. That doesn’t quite pay for my health insurance premiums, but it basically cuts them in half.
It is an obvious choice when you look at the numbers, and we're investing energy and we're investing in the technology we'll need to spread this message further and wider.
Posted by Wiley Long at 11:54 AM | Comments (0)
July 08, 2005
Health Insurance for All using Health Savings Accounts
It is a law in all states that, in order to drive a car, the car must be insured. This prevents uninsured individuals from taking advantage of a system in which most other drivers are insured, and so keeps things fair for everybody. The governor of Massachusetts, Mitt Romney, thinks the same logic should apply to health insurance.
This week he proposed a mandate requiring all citizens of the state to either carry health insurance, or agree to pay their medical expenses out of their own pocket.
Currently about 7% of the state's population is uninsured. About one-fourth of those are eligible for Medicaid, but are not enrolled. About half of the uninsured earn at least 300% of the federal poverty level, and should be able to afford individual health insurance, particularly a low-cost high-deductible Health Savings Account (HSA) plan. The remaining 150,000 people would get state subsidies to help them pay for private health insurance.
Hospitals currently overcharge people with health insurance (and people who pay for medical expenses out of their own pocket) in order to cover non-reimbursed expenses for those who come in without health insurance or Medicaid, and who refuse or are unable to pay the bill when they leave. This is a blatantly unfair system, one which too many people take advantage of.
Though the federal government continually controls more and more of what goes on in this country, states fortunately still write their own health insurance rules. When individual states have the opportunity to experiment, the best solutions can rise to the top. I wish Governor Romney success in this venture, and am looking forward to seeing the results.
Posted by Wiley Long at 10:03 AM | Comments (3)
July 07, 2005
Long-Term Health Care Savings Accounts
As the popularity of Health Savings Accounts (HSAs) continues to grow, similar types of legislation are being introduced in many different areas. A few weeks ago legislastion was introduced in the Michigan House that would allow for the creation of Long-Term Health Care Savings Accounts.
A Long-Term Health Care Savings Account would enable individuals to buy long-term health care insurance or to pay for the long-term health care costs for themselves, a spouse, parent or child, using funds from their account.
This legislation would create a $5,000-per-person, or $10,000-per-couple tax deduction for contributions made to the account.
I'm a strong believer that anything the government can do to encourage people to save for future health care expenses when they are working, is much better than expecting the government to care for everyone.
But even without these new plans, Health Savings Account holders can still use their funds to purchase long-term care insurance, as well as for health care expenses incurred in retirement.
Posted by Wiley Long at 10:34 AM | Comments (0)
July 06, 2005
Health Savings Accounts for Seniors on Medicare
J. Patrick Rooney, chairman emeritus of the Golden Rule Insurance Company, has suggested letting seniors on Medicare have Health Savings Accounts (HSAs).
Currently HSAs can only be opened and funded by those with qualifying high-deductible health plans. Roony explains that with a $2,600 deductible plan that has full prescription coverage, a senior would have enough money from Medicare to pay for his policy, and contribute $1,400 annually to his HSA. In addition, he would no longer have to pay $1,400 for Medigap and a $420 prescription-coverage premium. So even though the deductible is higher, the money saved in the Health Savings Account, and from not needing Medicap or prescription drug coverage, more than covers the deductible.
In addition to helping seniors save money and control their own healthcare, this proposal would save the U.S. Treasury billions annually. If nothing changes, estimates show that Medicare and Social Security will be 14% of GDP by 2079. And Medicare’s expenditures are estimated to be more than those of Social Security by 2024. This is a looming crisis that desperately needs a solution.
HMO’s, Medigap insurers, and the political left will certainly not like this idea. Neither will opponents of President Bush’s ownership society. Perhaps to their dismay though, the popularity of Health Savings Accounts are soaring, and it will become more and more difficult to oppose this type of legislation. Cutting government expenses, saving seniors money, and putting more control of healthcare expenses in the hands of those who use it – this sounds like a win-win to me.
Posted by Wiley Long at 02:14 PM | Comments (0)
July 04, 2005
The Freedom a Health Savings Account Offers
Individuals with a Health Savings Account (HSA) have even more freedom than most Americans, because they can use their HSA to pay for just about any type of health care, from any doctor they please.
Freedom
Its 4th of July weekend, and I'm thinking about freedom. There are always threats to our freedom and the most intelligent course is vigilence. Some threats to our freedoms come from terrorists and other enemies from outside the U.S. Others come from so-called "patriotic" Americans who want to take away your rights. Some want to take away to choose what you see on tv (your freedom of press), others want want to institutionalize a specific religion (your freedom of religion). And of course other factions want the government to have the right to spy on you, monitor your internet activity, and track the books you read (your freedom from unreasonable search and seizure).
It is my belief the core freedom that the Bill of Rights is designed to protect is freedom of thought and freedom of identity. By having the right to hang out with whomever I want, read whatever I want, say whatever I want, and practice my deepest spiritual beliefs in whatever way I choose, I am free to be who I am and think what (and how) I think. (I'm very wary of any one who claims they want to take any of those rights away from me, for my supposed benefit.)
Medical Freedom
One of the signers to the Constitution was Dr. Benjamin Rush, personal physician to George Washington. He did not wish for a group of people to be able to say what is "official" medicine, and what is outlawed, knowing that any group that gained this power would be looking out for their own interests, instead of the individual's.
Unfortunately, medical freedom never made it into the Bill of Rights. Nevertheless, in the United States we still have the freedom to choose our own health care to a large degree. Few Candians have the same freedom. In most of Canada it is illegal to purchase health insurance to cover anything that is also covered by the public healthcare system. Doctors are forbidden from selling their services for cash, if they are part of the public health system.
On June 9 of this year the Supreme Court of Canada overturned a Quebec law preventing people from buying private health insurance to pay for medical services available through the publicly funded system. You might wonder why anyone would want to buy private health insurance, if "free" public health insurance were available. Ask the guy who brought the lawsuit. He had to wait over a year for hip replacement surgery. In the U.S. this can usually be scheduled within 3 weeks or less. The flawed Canadian system has become notorious for very long waits (weeks or months) for many non-emergency operations.
In the decision, Chief Justice Beverley McLachlin and Justice John Major wrote "Access to a waiting list is not access to health care."
The Freedom a Health Savings Account (HSA) Offers
Individuals with Health Savings Accounts have even more freedom than most Americans, because they can use their HSA to pay for just about any type of health care, from any doctor they please. Your Blue Cross policy may not pay for Traditional Chinese Medicine treatment, but funds from your HSA sure will.
Find more information about owning a medical savings accounts at HSA for America
Posted by Wiley Long at 12:02 PM | Comments (0)
July 03, 2005
Health Savings Accounts offer Tax Deductible Trips
Health Savings Accounts (HSAs) allow you to pay for travel expenses that are specifically related to medical treatment. And world-class international hospitals are making the opportunity very attractive.
Most of the information for this article was sourced from http://www.cbsnews.com/stories/2005/04/21/60minutes/main689998_page4.shtml.
Bumumgrad hospital in Thailand is now taking in more than 350,000 internationl patients each year. Most of the doctors are internationally trained, the rooms are luxurious and feel more like a 5-star hotel than a hospital, and best of all - the prices are about 85% lower than in the United States.
India, which hopes to become the world leader in medical tourism, has even lower prices, and English speaking physicians, many of whom have returned to India after practicing in the U.S. or Europe. Patients in the article raved about the personal attention, and the luxurious care they receive.
We'll never see prices that low in the U.S., but nevertheless this is a great example of what competition can cause - better services at lower prices. As HSAs become more and more popular, and people are spending some of their own money on their medical expenses, doctors and hospitals will try to compete for our business, and the result should be higher quality medical care at a lower price. Until then, you may want to consider using your pre-tax HSA dollars to help pay for your next international trip...
Posted by Wiley Long at 10:18 PM | Comments (0)
July 01, 2005
Health Savings Accounts offer an Additional Retirement Account
Health Savings Accounts (HSAs) offer yet another form of long-term investment. From 1926 to present, annual rates of return in the stock market have varied from a negative 40%, to a postive 50%. But for the long-term investor, rates of return have always been positive.
Even an investor who put his money in the market just before the 1929 crash would have earned 6% if the money was held for 25 years. The worst lowest annual return for an investor who invested on a regular basis (taking advantage of "dollar cost averaging") was 7% over a 25-year period. The lowest return for any 35-year period is 10%.
Let's assume that a 40 year old couple places the maximum investment of $5,250 per year in their Health Savings Account, and earns 7% on their money for the next 25 years. If they do not withdraw any of that money for medical expenses until retirement (the wise investment decision), they will have $322,057 in additional retirement money in their HSA at age 65. A 10% return will result in $516,322 in their account, and a 15% return will give them over $1 million in additional retirement savings.
If they haven't reimbursed themselves for medical expenses incurred during that 25-year period, they can do so at that time, and that money can all be withdrawn tax-free.
Posted by Wiley Long at 10:19 AM | Comments (0)