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March 29, 2006
Create Health Savings Accounts for Seniors
Currently, the elderly pay half their health care costs out of pocket. These expenditures often come from wages and other taxable income. Even with the new Medicare prescription drug benefit, seniors' health care costs will continue to climb.
Health Savings Accounts could provide seniors with a way to save pretax dollars to pay their health insurance expenses. Unfortunately, seniors eligible for Medicare are not allowed to establish a Health Savings Account or make additional deposits to existing accounts.
There are also other restrictions on HSAs that make it difficult for younger people to accumulate funds that could help meet their needs after retirement.
Health Savings Accounts are needlessly restricted. Under current law, the annual Health Savings Account contribution is limited to the health plan deductible, up to a maximum of $2,700 per individual and $5,450 per family. But this may not be enough to accumulate funds sufficient to meet many people's health needs after retirement.
Ideally, reforms would allow unlimited contributions to HSAs and permit the accounts to wrap around third-party insurance - paying for any expense the insurance plan does not pay. Allowing nonseniors to deposit more funds into an HSA earlier in life would help build up balances for retirement, when health needs are greater. At the very least, people (and their employers) should be able to make an HSA deposit each year equal to their total out-of-pocket exposure, as President Bush has recently proposed.
Allowing Medicare-eligible seniors to make HSA deposits would help them build balances for when the need arises. Individuals aged 65 to 74 years spent about $9,094 per year on health care in 2000. However, individuals aged 75 years and above spent nearly three-fourths more (about $15,756). Thus, during later retirement most seniors will have higher medical bills than at any other time in their lives. If younger seniors were allowed to continue depositing funds - and accumulating interest - they could better afford the out-of-pocket portion of future medical bills.
Visit us at http://www.health--savings--accounts.com to learn more about HSAs
Posted by Wiley Long at March 29, 2006 08:50 AM