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April 29, 2008
Managing Costs With Your Health Savings Account
As health care consumers and employers look to Health Savings Accounts and high deductible plans to reduce their health insurance premiums, the insured are at higher risk for their medical expenses. In exchange for lower premiums, health care consumers spend hundreds or even thousands of dollars on deductibles before their insurance companies pay a nickel. The new trend has health care consumers scrambling.
Denver medical providers offer advice:
1.) Choose the appropriate place of service for healthcare needs, and avoid the emergency room if at all possible. Even with insurance company discounts, an ER visit will cost you more than $500.00.
2.) Call your primary care physician for an appointment before seeking treatment elsewhere. Treatment in your physician's office is almost always the least expensive alternative for accessing healthcare for minor injuries and illnesses.
3.) Consider an urgent care center or clinic for non-life and limb threatening injuries and illnesses, when your physician office is closed or unable to accommodate an appointment. Your average visit will likely cost about $150.
4.) Ask for self-pay or payment in full discounts at the time of service.
Denver's AfterOurs Urgent Care Centers offer patients who pay for their visits at the time of service substantial discounts. "Two out of ten insurance claims are denied for some reason, leaving patients in the middle. Collecting payment at the time of service reduces our administrative costs, so we are able to offer considerable discounts to our patients. Most (patients) have high deductible plans anyway. Payment information is forwarded to the patient's insurance company, so their payment amount is recognized by the insurance company and applied to their deductible. The difference is whether we collect the patient's portion up front or later", said Chris Rehm, Executive Director of AfterOurs Urgent Care.
So what happens when a patient pays more at the time of service than their insurance company allows for? Under current insurance laws, medical providers who collect more from the patient at the time of service than the insurance company is contracted to pay, must refund any overpayment directly to the patient. "Overpayments rarely happen on the front end, because we have good knowledge of our insurance contracts and new technology allows us access to patient deductible balances," stated David White, Co-Owner of Denver based Pinnacle Medical Billing. "Some payors contractually restrict the practice of collecting deductibles up front, and we can't require anyone to take advantage of the opportunity, but most insurance companies are happy that they and there patients save time and money by paying at the time of service."
Learn more about Health Savings Accounts
Posted by Wiley Long at 07:30 AM | Comments (0)
April 24, 2008
Survey Shows Satisfaction in Health Savings Account Plans Increasing
The Commonwealth Fund teamed up with the Employee Benefits Research Institute (EBRI) to publish the results of an annual, Internet-based survey on the experiences of enrollees in health plans with different levels of cost-sharing.
The previous three surveys all showed enrollees were not as satisfied with Health Savings Account (HSA) plans as those in comprehensive plans. However, satisfaction has improved in the most recent survey:
- Satisfaction rates were similar for the quality of care received (71 percent in HSA plans compared to 74 percent in comprehensive plans).
- Satisfaction with physician network was also very similar across both plans (76 percent HSA; 74 percent comprehensive plan).
- Overall, enrollees in comprehensive plans reported being more satisfied (92 percent claimed to be "extremely" or "very" or "somewhat" satisfied vs. 85 percent in HSA plans).
What supposedly most annoyed Health Savings Account enrollees was higher out-of-pocket spending:
- Twice as many were dissatisfied with out-of-pocket spending (43 percent) compared to those enrolled in comprehensive plans (21 percent).
- Yet, nearly two-thirds of HSA enrollees (63 percent) reported having a choice of health plan, compared to only 54 percent of those in comprehensive plans.
When asked why people chose their plans:
- Some 51 percent of HSA enrollees reported lower cost of premiums; 46 percent because they could save money and rollover later use; 28 percent of HSA enrollees liked the ability to control their own health care dollars.
- Of those in comprehensive plans; 41 percent chose the plan for its low cost-sharing, while 29 percent chose it for low premiums; controlling their own funds and savings for the future was negligible to them.
Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com
Posted by Wiley Long at 12:02 PM | Comments (0)
April 21, 2008
Getting Healthy Through Health Savings Accounts
A small Edina, MN company is finding its niche in the fledgling market for Health Savings Accounts, betting people soon will start investing more and more excess funds in their accounts.
Remjeske heads a small Edina, MN investment house called Devenir that's staking its future on Health Savings Accounts (HSAs).
Created by Congress in 2003 as a way for people who had high-deductible health plans to accumulate pretax dollars for medical expenses, Health Savings Accounts are slowly but surely gaining popularity, with about 6 million Americans enrolled this year.
As the balances in these accounts grow, Remjeske is betting that people will want to start investing some of it in mutual funds.
It's a controversial idea. If you're putting money aside in case you get sick, should you be gambling with it?
And especially in a volatile stock market like today's? Some financial advisers say no, especially for those who don't have a lot socked away. But proponents say that, for those who are affluent enough to build up tens of thousands in medical funds, investing some of it can be a way to make more money while reaping tax advantages.
Building a niche
Devenir is carving a niche in this nascent field. It manages about $100 million of the estimated $150 million in HSA investments nationwide. It has partnered with banks and insurers around the country, including Blue Cross and Blue Shield of Minnesota and OptumHealth Financial Services, part of UnitedHealth Group Inc.
Remjeske acknowledges that it's early days.
"We're like the 401(k) market in the early 1990s," he said. "Or the 529 college market in the mid-1990s." In other words, ready to grow... from 401(k) market to HSAs.
Five years ago, Remjeske left his job at RBC Dain Rauscher and started Devenir with several former co-workers and Piper Jaffray executives. At the time, their target was the 401(k) market.
But Devenir found itself consistently outbid by the big guys. "It's very difficult to differentiate yourself from a Schwab or Fidelity," said Remjeske, a fresh-scrubbed 36-year-old who has photos of his second baby on his desk.
Devenir soon found its differentiator: Health Savings Accounts.
Blue Cross Blue Shield was Devenir's first big contract, signed in 2004. But big is, of course, a relative term in the HSA market. Devenir manages $10 million in investments for Blue Cross HSA enrollees.
These days, when Devenir shows up to help bid for HSA contracts from large employers, it's often the investment adviser to multiple bidders, which may be health plans or banks. That's one reason why last year, Devenir tripled its assets under management to about $100 million. It now has five full-time investment professionals.
As with 401(k) plans, the funds are "self-directed," in that Devenir doesn't advise people how aggressive they should be in selecting investments. But the choices tend to include a greater number of conservative funds than is typical for a 401(k).
Last year, Remjeske was named one of 20 rising stars in the retirement investment world by Institutional Investor.
"They're one of the few investment advisers that specialize in HSAs," said Chad Wilkins, chief executive of OptumHealth Financial Services, which has 380,000 HSA accounts, the most in the country. OptumHealth, previously named Exante, has offered Devenir's slate of investments to its clients since 2005.
There are significant tax advantages to HSAs, said Kirk Hoewisch, president of HSA Bank in Sheboygan, Wis., which also works with Devenir. Like an IRA, there's an upfront tax deduction when you put the money in. It's tax-deferred, like an IRA. But unlike an IRA, any money taken out of an HSA after age 65 for medical expenses isn't taxed. (There is a nominal penalty for money taken out before age 65.)
Hoewisch divides HSA enrollees into spenders vs. savers. The savers -- who are also those most likely to invest -- tend to be self-employed and more affluent, he said.
When thinking of retirement investments, Hoewisch said, a 401(k) is best because many employers match the contributions, followed by HSAs, and finally, IRAs.
A growing HSA market
For now, most people are still struggling to understand the basic concept of HSAs for medical spending. The idea of investing is still a ways off.
In recent years, many large employers have started offering HSAs alongside high-deductible plans as one option beside traditional plans. Soon, benefits consultants predict, it could be the only option, as traditional plan premiums get too expensive for employers to shoulder.
A growing number of the self-employed have opted for high-deductible plans with HSAs, as premiums for traditional plans in the individual market become unaffordable to most.
Even then, it will take years to build up balances.
The average unused HSA balance rolled over from 2007 to 2008 at HSA Bank was $2,160, up from $1,734 the previous year, according to Consumer Driven Market Report, a trade publication. Enrollees who have at least $1,000 in cash in the account can invest anything above that.
"Investment accounts are probably going to be big 10 to 15 years from now," said Bill Wixon, public relations director for the 850-member Financial Planning Association of Minnesota.
But for now, "it's just not that big a fish to fry," Wixon said. "When people start accumulating tens of thousands, we are going to ask them to invest it conservatively."
Visit HSA for America for more information on Health Savings Accounts.
Posted by Wiley Long at 12:34 PM | Comments (0)
April 18, 2008
Do You Qualify For a Health Savings Account
I am 60 and retired with sources of income from investments and pensions, but no earned income. Would I qualify for a Health Savings Account if I took out a high-deductible policy?
You sure can, and it's a great idea. Unlike with IRAs, you don't need to have earned income to qualify for a Health Savings Account. Instead, you just need to open a high-deductible health insurance policy. For 2008, the deductible must be at least $1,100 for individual coverage or $2,200 for family coverage.
Then you can make tax-deductible contributions to a Health Savings Account. In 2008, most people can contribute up to $2,900 to an HSA if you have individual coverage, or up to $5,800 for family coverage. People who are age 55 and older also can make a $900 catch-up contribution in 2008. You can't contribute to an HSA after you sign up for Medicare at age 65.
You don't need income from a job to take advantage of the tax deduction. "They can deduct their contributions from any type of taxable income, such as earnings from investments, even if it is not earned income," says Roy Ramthun, president of HSA Consulting Services in Washington, D.C.
The money accumulates tax-deferred in the account, and you can use it tax free for medical expenses in any year. After age 65, you can use the Health Savings Account money for anything without a penalty. But it's still best to reserve the account for health care costs, which can spare you the tax bill.
If you're on Medicare, the Health Savings Account should still come in handy for plenty of out-of-pocket expenses, such as co-payments and deductibles as well as premiums for Medicare, Medicare Advantage or Part D (but not medigap premiums). You also can use the money for part of the premiums for qualified long-term care insurance policies.
For more about Health Savings Accounts, visit us online at: http://www.Health--Savings--Accounts.com
Posted by Wiley Long at 09:21 AM | Comments (0)
April 14, 2008
Long Term Care and Health Savings Accounts
As the April 15 tax deadline looms, filers should not overlook the deductions allowed for long term care insurance and the potential combination of using your Health Savings Account to pay for them.
According to LTC Financial Partners LLC, the nation’s most experienced long term care insurance agency, "People with LTC policies can deduct substantial sums, and those who don’t have policies, but want them, can set themselves up now for deductions next year."
According to the Internal Revenue Code, the 2008 deductible amounts can be as high as –
- $3,850 if you’re 70 or over*
- $3,080 if you’re over 60 but not over 70*
- $1,150 if you’re over 50 but not over 60*
- $580 if you’re over 40 but not over 50*
- $310 if you’re 40 or under*
(*Note: Before end of taxable year, if medical expenses exceed 7.5% of adjusted gross income.)
But the tax benefits may not end there. “When people start taking their benefits, there can be additional deductions in some cases,” Truesdell says. “When a policy is designed to pay on a per-diem basis, a limited portion of the benefits may be excluded from taxable income.” Also, when a policy is paid for out of a Health Savings Account (HSA), there can be tax advantages. “Health Savings Accounts are funded with pre-tax dollars, and long term care premiums are eligible medical expenses, according to the IRS (Publication 502).”
For businesses, the tax breaks can be especially attractive, Truesdell says. “For example, when small business owners pay the premiums — for employees or themselves — it’s generally deductible as a business expense.” The self-employed, S-corporation owners, and C-corporation owners are NOT subject to the 7.5% rule that limits the medical-expense deductions of individual taxpayers.
Posted by Wiley Long at 04:55 PM | Comments (0)
April 08, 2008
Health Savings Accounts Are A Great Business Opportunity
Some business owners say they never like to sit tight. They're always thinking of new schemes to make millions. Chocolate chip cookies stuffed with bubble gum. Golf balls with GPS devices. A working cell phone.
They're jealous of those entrepreneurs that fail at 87 businesses before finally getting it right. They've seen photos of them vacationing in Tahiti with a bikini-clad model under each arm, and we say why not us?
So, as a public service to anyone who wants to start a new business, here's a great idea to chew on: Sell and service Health Savings Accounts (HSAs)... No, I'm not kidding.
What are Health Savings Accounts you ask? Exactly! I say. If you're not intimately familiar with them now, you will be. Oh, you will be.
Health Savings Accounts are not new. But they're getting hot. How do they work? How can you cash in? Read on.
First, you need to find a new client... any business with more than five employees and a standard health insurance plan will do. Let's say your marketing machine produces a prospect for you. We'll call him Bob. "Bob," you say. "It's time to make some changes to your employees' health insurance and really save them some money."
You then sell Bob a new health insurance plan that's been preapproved by the government (or you might be able to use his existing one). The biggest change is that the deductibles get raised significantly (and his premiums go down accordingly). But before Bob and his employees panic, you explain to him that at the same time you're going to open up a Health Savings Account for each participant. No worries.
During the year, when Bob gets his paycheck, an amount comes out and is deposited into his own HSA account that you administer. It's taken out before taxes, lowering his taxable income (and therefore lowering his tax). It's still his. It's not going anywhere. It just gets stuck in an account earmarked for health expenses. It's earning interest. And he can withdraw it for any reason, without penalty, when he hits 65. Bob's breathing a little easier.
One little thing. Just tell Bob or any member of his family not to get sick. OK?
You see, if Bob or one of his family has a health issue, he has to take money from the account to pay the deductible. Once the money's used up, the insurance policy kicks in so he's covered. But if there are no health issues, he gets to keep the money year after year. So Bob should tell his kids to stop their whining. There's nothing a little Motrin can't handle, OK?
Back to the money. If Bob is covering his family he can put away more than $5K each year pre-tax, which is more than a $1,500 tax savings every year. Sweet! And if he's over 50 right now he can "catch up" on contributions too so he's putting money away for health benefits when he gets older and starts wearing diapers.
So here's the summary: Health Savings Accounts lower health premiums for companies (higher deductibles equal lower premiums). They lower taxes for the participants. They help save money for the future. If a participant dies because he or she didn't want to pay money for a doctor's visit then, hey, blame it on Darwin.
Business owners are going to wake up to this someday. It's too easy to setup. It's too much of a slam dunk. In fact, it's estimated that there will be more than $75 billion invested in Health Savings Accounts by 2010. Ka-ching! Don't want to go into this line of business yet? Fair enough. But at the very least, you may want to make it a point to investigate Health Savings Accounts. It's the penny pinching kind of thing to do. But please, don't cough near me. I don't want to have to pay for a doctor's visit either!
Posted by Wiley Long at 02:42 PM | Comments (0)
April 04, 2008
Not All Tax Preparation Software Can Handle Health Savings Account Deductions
Several Health Savings Account owners who file their federal taxes electronically are complaining that commercial tax-preparation software makes it difficult to take Health Savings Account deductions, and as a result some Americans are missing out on a key advantage of Consumer Driven Healthcare.
"A number of people have been frustrated in dealing with the software," says Grace-Marie Turner, president of the Galen Institute, a Washington, D.C.-based health and tax policy research organization. "I'm hearing from more and more people."
One senior Department of Health and Human Services (HHS) official, who asked not to be identified, says he was befuddled by Intuit Inc.’s TurboTax when he recently sat down for his annual taxpayer rite. He couldn’t find the prompt for a Health Savings Account deduction on TurboTax’s 1040 form.
“In prior years, the system logic just defaulted me to the form where I have spent a grand total of 30 seconds entering my information,” says the official. In frustration, he reached TurboTax’s technical support.
“When I asked him why they had changed their system logic, he told me that he didn’t know,” the official says. “When I pointed out that entering my contributions had saved me $900, but that there were likely taxpayers who didn’t understand that they would need to look for the form and would wind up overpaying their taxes due to TurboTax’s negligence, I was greeted with silence.”
Searching TurboTax’s help files, consultant and former White House health policy advisor Roy Ramthun found the answer — Health Savings Accounts are addressed under “misc. income” rather than “misc. deductions.” “I’m not sure why TurboTax would put it this way,” says Ramthun, of Silver Spring, Md.-based HSA Consulting Services. “I would think it would be more obvious that it is ‘misc. deductions.’”
Turner says that the problem is so widespread that companies have sent out bulletins to their employees instructing them how to handle the HSA deduction with TurboTax.
Electronic Tax Filing on the Rise
According to the IRS, more Americans file their federal taxes electronically than use old-fashioned paper. Problems with HSA deductions will likely increase in the future as growing numbers of taxpayers sign up for HSA-based health plans and file taxes electronically.
According to Mountain View, Calif.-based Intuit, Americans bought almost 9.4 million copies of this year’s TurboTax software.
Calls to H&R Block Inc., Jackson Hewitt Tax Service Inc., Liberty Tax Service and other tax-preparation services failed to reveal similar problems with HSA deductions.
H&R Block markets the other leading tax software product, Tax Cut. A company spokesperson denies that HSA-deduction problems have been reported with the product.
Bob Meighan, vice president of Intuit’s consumer tax group, says that TurboTax has received no complaints about the deductions and that detailed information about HSAs is readily available by searching on any TurboTax screen.
“This is the first I’ve heard about it,” he tells ICDC. “If people are having a difficult time, frankly I’m surprised. If you put in any logical term in the search window on every single screen, it will tell you exactly where you go. Whether you think it is income or a deduction, if you search it will be on the very first screen.”
Meighan says that TurboTax technical support staff are trained to help customers use the software but are not tax-preparation experts and shouldn’t be expected to know the particulars of every tax deduction. “If you ask the average American what an HSA is, they aren’t going to know either,” he says. “They don’t come up all that much.”
Intuit has no plans to overhaul TurboTax for next year, but is speaking with Ramthun and others stymied by the HSA deduction and may end up tweaking its product, Meighan says.
“We’re listening to the feedback,” he says. “If we need to break things out better, we’ll do it.”
Jackie Perlman, tax researcher with H&R Block’s Tax Institute, suggests that the novelty of HSAs and their inherent complexity are the root of the problem for tax preparation.
“Health savings accounts are still fairly new,” she says. “They are the marriage of two very complicated things — taxes and insurance.”
Pearlman says that one of the problems is that IRS forms and coding were adapted from the old-style medical savings accounts. “They are confusing,” she says. “Unfortunately, a lot of people could be missing out on a great deduction."
Posted by Wiley Long at 02:37 PM | Comments (1)
April 01, 2008
BearingPoint Predicts Rapid Expansion of Health Savings Accounts if Universal Health Coverage Programs are Adopted
BearingPoint, Inc., one of the world's largest management and technology consulting firms, released projections for the impact of the most widely touted health proposal across the presidential candidates' platforms - universal coverage - on multiple health constituents. Universal coverage as described in the presidential health platforms, is being applied in California and Massachusetts and requires coverage for all (or nearly all) residents through mandates or incentives, for insurance usually supplied through employers of all sizes.
In application, this would increase the offering of high-deductible health plans (HDHPs) and Health Savings Accounts (HSAs).
According to BearingPoint's forecast, the implementation of universal healthcare in the U.S. could further impact all health constituents, including increasing HSA projections beyond the current 2012 estimates of more than 20 million new accounts with more than $200 billion in assets.
Many of the presidential candidates are currently discussing the possibility of universal health coverage programs in some form. Most are mentioning plans that may parallel the state initiatives in California and Massachusetts, wherein the employer is required to offer coverage or pay into a pool for employees to secure such coverage. BearingPoint believes that this type of initiative would increase adoption of HDHPs (a.k.a. 'low-premium' health plans) as a primary coverage vehicle, enabling more people to open accompanying save/spend/invest accounts - HSAs. The increase in individual HSA accounts to more than 20 million and the growing trend of consumers paying out-of-pocket for medical expenditures are driving financial institutions to evolve. Insurers, banks, investment managers and card companies are seeking out new platforms, systems, practices and strategies to serve employers and consumers in their new healthcare spend/save/invest needs.
"Universal coverage programs could significantly change the way Americans navigate and manage healthcare, leading consumers to require new financial accounts and tools to effectively spend/save/invest funds related to healthcare services,' said Kirsten Trusko, practice lead of the BearingPoint's Banking Insurance Group. 'As they enter unfamiliar territory, financial institutions across the country will depend on new platforms and systems to support the products, services and tools developed for consumers."
The Company's views on the potential impact of universal healthcare program adoption, and therefore, multiplied HDHPs and Health Savings Accounts include the following:
Insurance Companies: A high percentage of the approximately 40 million uninsured Americans could be added to the commercial health insurance infrastructure, which is currently spending 30 percent of its revenue on administration due to outdated systems, poor interoperability and manual processes. Health plan providers may need to invest in revamped systems and processes to support the potential growth from the addition of 20 to 40 million more currently uninsured consumers.
Health Providers: Traffic flow in the emergency room (ER) could become more manageable as additional people become insured, thus seeking primary care through traditional options rather than overusing ERs for non-urgent care. This could result in a reduction of write-offs for accounts receivable by hospitals and other health providers. Additionally, the increased 'out-of-pocket' payments associated with traditional and HDHP plans could raise the need for real-time access to eligibility, co-pay, deductible status and pricing at the point of care.
Banks: HDHPs and HSAs are already experiencing growth among the insured and are estimated to reach more than 30 percent of the commercially insured population by 2012. Add to that the 20 to 40 million Americans who could be entering the healthcare system from the uninsured ranks and the number of HDHPs and HSAs could climb. Banks and/or investment managers could expect new deposits in HSAs to grow to more than $200 billion in the next five years, creating far greater consumer need for streamlined methods of information access, spending, saving and health financial planning.
Card Networks: Current 2012 estimates for healthcare spending are $4 trillion each year, according to the National Coalition on Healthcare. The volume of data and money clearing HSAs and related accounts will raise new requirements for security, fraud, data types/formats, timing and access to effectively serve consumers, providers, carriers and other stakeholders. Networks may work to assure systems (current or new) can accommodate industry changes and growth.
Investment Banks: Creators of HSAs have referred to them as 401(k)s or IRAs for health. With the potential for more than $200 billion in new consumer deposits by 2012, investment managers will be overseeing more money and customers. However, while investment managers handling retirement funds are typically managing funds held until a retirement date, HSA funds may need to be accessed regularly or early in the event of medical need. Therefore, investment banks will need transactional capabilities beyond traditional investment platforms and may seek partnerships or acquisitions to secure them.
Consumers: 87 percent of employers will offer consumer-directed healthcare accounts in the next years (including HSAs) with 50 percent of the HSA employers contributing money into these accounts. In order to navigate these new products, consumers will need tools to: 1) understand and compare quality and costs for healthcare services and 2) plan what they will need to save/spend/invest on healthcare, now and into retirement.
Along with its in-depth market forecasts, BearingPoint has also developed comprehensive financial and technology models to help financial services companies understand and prepare for the possible changes in the healthcare marketplace that could result from the implementation of universal health coverage.
Posted by Wiley Long at 01:25 PM | Comments (1)