Health Savings Account Blog                  

June 25, 2009

Health Savings Accounts a Viable Option

House Democrats finally unveiled their long-awaited 852-page health care "reform" legislation that engineers a government takeover of medicine. The bill is a staggeringly expensive bureaucratic nightmare that Democrats will try to defend in a series of hearings that have already begun.

As details of this leviathan bill begin to emerge, what is becoming increasingly clear is this plan, if passed, will cost American jobs.

Democrats would use the cost of a business’ annual payroll to define whether or not a small business is subject to a new eight percent federal tax. Only those with less than 10 employees on average would be spared the onerous new tax. Subjecting these small businesses who employ 47.3 million people and provide $1.7 trillion in wages annually to the Democrats’ new tax will place these jobs and wages at risk.

Additional employer mandates that will require some small businesses to offer employee coverage would cost another 4.7 million jobs according to a model from the President’s own economic advisors.

The House Democrats’ plan also places mandates on every individual American citizen to buy health insurance or pay a hefty penalty to Washington equal to almost two percent of their annual income. Of course, if you can’t afford to pay for the coverage, you would be forced into the government-run system that will make health care more expensive and ration care based on age, cost and survivability rates. The government system also puts bureaucrats in charge of medical decisions, like putting the DMV in charge of your medical decisions.

Rep. Henry Waxman (D-Calif.), chairman of the House Energy and Commerce Committee, has admitted that their health care plan would be financed by raising taxes. There have been reports of a whole slew of new taxes on individuals being considered, from a national sales tax to additional taxes on cigarettes, new taxes on sodas, and raising taxes on everyone making more than $200,000 a year.

According to a Lewin Group study published earlier this year, a similar Democrat plan would force more than 100 million Americans out of their current health coverage and into the government system. The Congressional Budget Office issued a report last week on the similar plan authored by Senate Democrats that would force at least 23 million people out of their private health care coverage. According to news reports, even the White House has admitted that statements made by the President promising you can keep your current health care coverage if you like it shouldn’t be taken literally.

Rep. John Boehner (R-Ohio), the House Republican leader, talked Friday about the Democrat plan.

“This plan is nothing less than a government takeover of health care, and families and small businesses who are already footing the bill for Washington’s reckless spending binge will not support it,” Boehner said. “Raising taxes, rationing care, and empowering government bureaucrats -- not patients and doctors -- to make key medical decisions is not ‘reform.’ This plan will make health care more expensive, reduce the quality of care for millions of families and small businesses, cost American jobs, and force untold millions of Americans off their current plans and into a government-run nightmare operated by federal bureaucrats.”

House Ways and Means Committee ranking Republican Dave Camp of Michigan expressed concerns about the cost of this undertaking.

“The Democrats are refusing to reveal the price tag of this bill or how they will pay for it, but it is obvious it will cost well over a trillion dollars,” Camp said. “We will certainly need to examine the details, but I fear this plan will force tens of millions of Americans to lose their current health care coverage and put the federal government in charge of determining what doctors and treatments are available to patients. Those dangers will be magnified by the hundreds of billions of dollars in hidden tax increases that could cause millions more Americans to lose their jobs.”

“Americans need a real bipartisan solution on health care -- this bill isn’t,” Camp added. “The sooner Democrats invite us to sit down together, not just as Republicans and Democrats, but as Americans, the sooner we can craft a commonsense solution that will make health care more affordable, accessible and available for all Americans.”

Gohmert Introduces Health Savings Accounts Health Care Plan

Rep. Louie Gohmert (R-Texas), the man who brought you the Tax Holiday stimulus plan, has a fresh, innovative health care plan that centers on health savings accounts that give individuals control over health care spending.

(Gohmert’s “tax holiday” alternative to Obama’s stimulus plan would have simply excused Americans from paying taxes for most of the year. It would have worked -- at far greater speed and lower cost -- than Obama’s failed stimulus package.)

Every American citizen would maintain a personal, family, household or employer-provided Health Savings Account (HSA), all contributions from pre-tax dollars. Rather than filtering money through “premiums, profits and taxes first,” patients would spend the money directly from their own HSA. There is no limit on how much pre-tax money could be put into this health savings account. This would work in conjunction with a catastrophic insurance policy that is adjustable as the HSA grows over years and even generations. These Health Savings Accounts would roll over each year and would also be an asset that would be passed on to your family or designee.

Any amount over $3,000 could also be invested in a manner that would “include stable, inflation-protected federal treasury bonds so that your investment can have added growth. A separate type of federal Treasury bond may be created in other legislation specifically for such investment. That way, as long as there is a United States, your healthcare savings will be there for you when you need it.”

Each person would be issued a debit card to access the funding. These cards would be coded and could only be used for health care purchases. No hassles or paperwork.

“We are rolling out a new health care plan because the plans we’ve seen so far have involved too much government and too much insurance company involvement, which has been a big part of our problem,” Gohmert said at the announcement. “If you liked my Tax Holiday Plan, you’re going to love this one. This plan will give every American the treatment that they need, when they need it, with the doctor of their choosing and at a price that is affordable.”

You can read the plan online here.

Posted by Wiley Long at 10:00 AM | Comments (0)

March 23, 2009

Health Savings Accounts at Tax Time

Health Savings Accounts are a great way to pay for your health care when you have a qualifying high deductible health insurance plan. One big benefit is that any money you deposit into your Health Savings Account is deductible on your federal tax return. It is also deductible on all but 4 state tax returns.

If you have an HSA-qualified health insurance plan, but you haven't fully funded your Health Savings Account for 2008, you can still deposit money in it before filing your taxes!

The catch is that you must have opened the HSA in 2008, you can't open it now and try to take the deduction for 2008. If you opened an HSA in 2008 but didn’t fully fund it, and you don't have some other tax deductible place to put it (or you maxed them all out) remember that the upper limit for 2008 for an individual plan is $2900 and for a family, $5800. DON’T exceed the limits. HSA contributions and disbursements are reported to the Feds.

So if you didn't open it last year, are bummed that you are missing out on this easy, above the line deduction and you are eligible, open it now. Find an HSA Administrator and get a head start on your 2009 deductions. And, best of all, at the end of the of every year it's not "use it or lose it" – it rolls over.

Learn more about Health Savings Accounts and how you can get an HSA health insurance plan at HSA for America.

Posted by Wiley Long at 10:31 AM | Comments (0)

February 26, 2009

Data Shows Health Savings Accounts Are Cutting Premiums

The coming health care reform is sure to set off the huge battle as interest groups struggle to be among the winners when the federal government attempts to reshape 17 percent of the U.S. economy through the blunt tools of increased spending and regulation.

While Health Savings Accounts are a great tool to help reduce health care spending, one basic problem still remains: The tax deductibility of employer-provided health coverage is a major cause of the resource waste and other problems afflicting the U.S. health-care system.

In particular, the tax deduction yields a large subsidy for expensive coverage characterized by low deductibles and low copayments for covered individuals and their families.

The 2004 Medicare Modernization Act contained a provision creating Health Savings Accounts (HSA) for current and future medical expenses. Individuals and/or their employers may deposit pretax funds into the accounts, and subsequent withdrawals (for qualified medical expenses) are not subject to taxation.

The accounts must be coupled with specific features, the most important of which is a large deductible. Because such coverage is available to individuals and families in the non-group market, HSA-qualified insurance moves away from the bias in favor of employer-provided coverage.

The higher deductibles provide incentives for increased discipline in the utilization of health-care services, while preserving coverage for large medical expenses.

In a study for the Manhattan Institute, the first four years of HSA-qualified health insurance has been evaluated. As designed, such coverage has deductibles significantly higher (by multiples between 1.2 and 4.7) than those for more traditional policies.

Out-of-pocket maximums – the total amount that patients are responsible for paying, including the deductible – also are higher for HSA-qualified policies, but evidence suggests that this is driven almost entirely by the higher deductibles.

At the same time, premiums for HSA-qualified policies are 10-40 percent lower than those for other types of plans, and are growing far more slowly, suggesting that such coverage does increase incentives to economize.

This is consistent with empirical evidence indicating that higher degrees of cost-sharing induce greater cost-consciousness in patients, but the use of preventive and chronic illness services is similar for enrollees in HSA-type policies and more traditional plans.

This may be due to the fact that a wide range of preventive care services is covered before plan deductibles are met under most HSA-qualified policies.

For the HSA-type approach to yield important aggregate efficiencies, it must be adopted by a significant proportion of the insured. So far, only 11 percent of firms offering health coverage offered an HSA-qualified option in 2008.

Still, the early growth of Health Savings Accounts and other high-deductible coverage thus far outpaces that of IRAs and 401Ks: HSA- and other high-deductible coverage grew over the first four years to 3 percent of all private coverage by 2007; the comparable figure for IRAs (as a proportion of all pension assets) was 2 percent, and for 401K-type plans was a four-year decline to 8.6 percent.

HSA-qualified coverage can still be improved. Many consumers do not understand the high-deductible/savings account features of HSA coverage; only 53 percent find it "easy to understand."

This means that both employers and insurers have work to do explaining the features and advantages of HSA-qualified coverage. Moreover, government policies affecting HSA-qualified plans could make this type of coverage more attractive.

To take two examples: Expenses for chronic care should be covered on a first-dollar basis after a deductible is met for the first year, and the annual contribution limit for Health Savings Accounts should be increased to the annual out-of-pocket maximum expenditure for the given plan.

There is no shortage of worthy reforms, but it's clear that the HSA approach offers hope for the U.S. health-care system in a way that the big-government plans being discussed do not. It's not too late to make Health Savings Accounts the centerpiece of health-care reform.

Learn more about Health Savings Accounts at HSA for America.

Posted by Wiley Long at 10:50 AM | Comments (0)

February 16, 2009

Puerto Rico establishes Health Savings Accounts

Puerto Rico has established Health Savings Accounts, which will allow contributions to the account to be exempt from personal income tax, and will apply to the taxable years that commence on and after January 1, 2009. Under the Health Savings Accounts, the insured will choose the provider and/or health service that they want to receive payment and will pay for those services with the funds that had accumulated in their Health Savings Account (HSA), covering up to the total annual deductible. The employee and the employer both may make contributions to the Health Savings Accounts. Once the insured has covered the high annual deductible, either charging the expenses eligible for medical attention to the funds in the HSA or with another source of funds, coverage from the traditional medical plan will begin.

The Health Savings Accounts will allow annual contributions that are not considered income received by the taxpayer, that are deductible when taxed, and after the first year are converted into a savings vehicle with tax benefits. Upon reaching the age of 65 years, the owner of the HSA may withdraw the accumulated funds and use them for any purpose (it does not require a medical expense) without having to pay penalties, but will pay tax on the withdrawn amount. Amounts deposited in a health savings account beyond the limits for each year are subject to a 6% penalty. (Act No. 156 of August 4, 2008, effective immediately.)

Posted by Wiley Long at 08:48 AM | Comments (0)

January 20, 2009

Employer Comparable Contributions to Health Savings Accounts Under Section 4980G

SUMMARY: This document cancels a public hearing on proposed rulemaking providing guidance on employer comparable contributions to Health Savings Accounts (HSAs) under section 4980G of the Internal Revenue Code as mended by sections 302, 305, and 306 of the Tax Relief and Health Care Act of 2006. The proposed regulations also provide guidance relating to the requirement of a return to accompany payment of the excise tax under section 4980B, 4980D, 4980E or 4980G of the Code and the time for filing that return.

These proposed regulations would affect employers that contribute to employees' Health Savings Accounts and Archer Medical Savings Accounts, employers or employee organizations that sponsor a group health plan, and certain third parties such as insurance companies or HMOs or third-party HSA administrators who are responsible for providing benefits under the plan.

SUPPLEMENTARY INFORMATION: A notice of public hearing that appeared in the Federal Register on Wednesday, July 16, 2008 (73 FR 40793), announced that a public hearing on Health Savings Accounts was scheduled for October 30, 2008, at 10 a.m., in room 2116, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. The subjects of the public hearing are under sections 4980B, 4980D, 4980E and 4980G of the Internal Revenue Code.

The public comment period for these regulations expired on October 14, 2008. Outlines of topics to be discussed at the hearing were due on October 13, 2008. The notice of proposed rulemaking and notice of public hearing instructed those interested in testifying at the public hearing to submit an outline of the topics to be addressed. As of Wednesday, October 15, 2008, no one has requested to speak. Therefore, the public hearing that was scheduled for October 30, 2008, is cancelled.

Visit our website for more information on IRS Health Savings Account regulations.

Posted by Wiley Long at 08:50 AM | Comments (0)

January 11, 2009

New Georgia Law on Health Savings Accounts

HB 977: Health care

This new law, that went into effect Jan 1, 2009, relates to health plans with high deductibles and associated Health Savings Accounts. The idea is to give health coverage to more uninsured Georgians. Under such plans, consumers pay high deductibles, but get tax breaks for putting money into savings accounts to be used for health care. The new law exempts insurers from paying taxes on premiums in the sale of the high-deductible savings account plans. That would save health insurers $146 million in tax breaks over the next five years, according to consumer groups.

Proponents say the law will spark competition among insurers to sell the plans, making them cheaper. Critics said the new law is essentially a tax giveaway to insurance companies that sell the plans.

Posted by Wiley Long at 12:24 PM | Comments (0)

November 04, 2008

Health Savings Accounts on Election Day

It has been reported by the CDC's National Health Information Survey (NHIS) that consumer-driven healthcare and Health Savings Accounts has reached the "tipping point" of 20 percent of the under-65 population. Consumer empowerment is about taking money away from third-party payers and putting it in the hands of consumers to spend as they wish. It is much more efficient to pay small claims directly rather than have insurance pay them, and the opportunity to save money changes the behavior of the consumers.

The consumer shops price, service, and quality more, which causes healthcare providers (medical clinics, pharmacies, etc.) to compete harder for those customers by offering more competitive pricing, more convenient hours, and better service. The consumers also become better educated, and are less likely to waste money than when someone else is paying the bill.

Now that 20 percent of the population has a Health Savings Account, we will begin seeing a profound effect on the delivery of healthcare. Every doctor, hospital, and pharmacy will have a fair number of patients paying cash, and will need to respond accordingly. Changes in our healthcare system are certainly coming, but no matter who gets elected, Washington will have a difficult time slowing down the growth of Health Savings Accounts. This is a great thing, because it is really the only long-term solution that will control costs, while also providing individuals with the freedom and ability to access high-quality healthcare that meets their needs.

In the mean time, the tremendous amount of government spending and debt will put pressure on the next candidate to raise taxes, despite the promises of both leading candidates to cut taxes. Everyone who is smart about managing their money should open and fund an HSA today, as one way to shelter current income and the growth of that investment from the reach of government tax-collectors.

Have a great week, and go out and vote today!

Posted by Wiley Long at 12:08 PM | Comments (0)

October 01, 2008

Stop Attacking Health Savings Accounts

To get a clearer picture of the competing visions for health care reform, Americans need to look no further than the surgery some in Congress want to perform on patient choice. The disagreement, in Washington as well as on the campaign trail, is about whether consumers ought to have more or less say in their own health care.

Some pre-op background: As part of the Medicare Modernization Act of 2003, Congress created Health Savings Accounts. The idea was to give patients an affordable alternative to the high insurance premiums of traditional "first-dollar" coverage.

Health Savings Accounts allowed consumers to choose a low-premium insurance option they could couple with a pre-tax savings account to cover "qualified" health expenses.

Of course, no serious health policy analyst believes Health Savings Accounts are a panacea for all that ails America's health-care system. But the accounts were a welcome step in the direction of patient-centered health reform.

More than 6 million Americans are enrolled in HSA-eligible health plans. And the popularity of these plans is growing, in no small part because patients can determine how much of their money to spend today, or save for tomorrow, for health care expenses. In short, Health Savings Accounts allow patients to make prudent decisions for themselves.

Yet some in Congress see Health Savings Accounts differently. These critics don't trust consumers to manage their own money. For them, patient-centered health care is either "too hot" or "too cold."

Here's how this Goldilocks Theory works:

The critics first say account balances are too low to cover the higher deductibles carried by low-premium health plans. They object that patients aren't protected from catastrophic expenses or might decide to forgo necessary care.

Yet these same critics proceed to argue HSA balances are too high because patients are saving too much. They say the money isn't going toward health care today and the accounts are merely tax havens for the wealthy.

So are account balances too low or too high? And what amount is "just right"?

HSA detractors in Congress don't know these answers. But for some reason they seem to think politicians, insurance companies and policy nerds are better suited to call the shots on how you spend your money. This reasoning reflects an underlying assumption that patients can't be trusted to effectively control their own health-care decisions.

But the congressional critics know better than to put their cards on the table. So rather than attack Health Savings Accounts directly, they create a diversion over account balances.

The House of Representatives has passed a measure requiring consumers to "substantiate" in advance that withdrawals from their Health Savings Accounts are made for "HSA qualified medical expenses." The Senate, which hasn't yet discussed it, should recognize the folly of this approach.

Why subject patients to more burdensome government regulation that adds paperwork, drives up administrative expenses and makes the accounts less desirable?

HSA opponents contend patients are under no obligation to use withdrawals -- their own money, remember -- for health care. This is a distraction, not a real concern. At least 90 percent of account funds go toward qualified medical expenses, according to the Government Accountability Office.

And our friends at the Internal Revenue Service deem misuse of HSA funds to be illegal, meaning account holders are already subject to oversight. There's nothing illegal about a consumer spending money on "unqualified" expenses, either, so long as he pays taxes on that amount.

The real reason Health Savings Accounts are under the knife of the critics? Some in Congress are at ideological odds with patient-centered health care. The dispute shows, yet again, they want to preserve and protect the worst features of the status quo.

Posted by Wiley Long at 09:53 AM | Comments (0)

September 09, 2008

IRS Clarifies Questions About Health Savings Accounts

New Internal Revenue Service guidance that answers dozens of questions employers have raised about health savings accounts will further boost the booming Health Savings Account market, experts say.

The much-anticipated guidance resolves everyday issues that include whether employees receiving services from on-site corporate medical clinics are eligible to open Health Savings Accounts, what employers can do when they mistakenly make a contribution to an employee’s Health Savings Account, whether Health Savings Account debit cards can be coded to pay only medical expenses and when Health Savings Account funds can pay Medicare Part D premiums.

“The good news is that we have gotten answers to a lot of questions,” said Karen Frost, a consultant with Hewitt Associates.

By resolving so many issues, experts say the guidance will speed up employers’ already rapid adoption of HSA-linked consumer-driven health-care plans. Enrollment in HSA-linked high-deductible health insurance plans climbed to 6.1 million as of Jan. 1, a 35% increase from a year earlier, according to America’s Health Insurance Plans, a Washington-based trade group.

“Some employers were reluctant to put in the arrangements until they had, in black and white, answers to questions that had been raised,” said Sharon Cohen, an attorney with Watson Wyatt Worldwide.

“This will be another boost to Health Savings Account growth,” said Andy Anderson, of counsel with Morgan Lewis & Bockius in Chicago.

Experts concur that the biggest issue addressed by IRS Notice 2008-59 involves on-site clinics. Such clinics have proliferated in recent years for a variety of reasons, including corporate belief that care can be delivered at a lower cost in a clinic compared with physician offices and other medical settings while reducing how long employees receiving care must be away from their jobs.

The interaction of clinic cost-sharing features and HSA eligibility requirements was unclear until the new guidance was issued. Under federal law, Health Savings Accounts must be linked to high-deductible health plans, with employees being subject this year to deductibles of at least $1,100 for individual coverage and $2,200 for family coverage.

And since many on-site clinics provide services at little or no cost to employees, many employers were uncertain if those low cost-sharing requirements would make employees ineligible for Health Savings Accounts.

The IRS answer is that employees’ HSA eligibility is unaffected by access to free or low-cost care at on-site clinics as long as the clinic does not provide “significant” medical benefits. Annual physicals, immunizations, allergy injections, non-prescription painkillers and treatment of on-the-job injuries would not be considered significant.

The breadth of services allowed without running afoul of the HSA cost-sharing requirements “gives the green light to a lot of on-site clinic” arrangements, said Jay Savan, a principal with Towers Perrin.

On the other hand, employees with access to on-site corporate clinics that provide extensive services at little or no cost would lose HSA eligibility. The IRS, in its guidance, provides a specific example: a hospital that allows its employees to receive care at its facilities for all of their medical needs at little or no cost.

“In short, the care provided can’t be too comprehensive,” said Watson Wyatt’s Ms. Cohen.

Still, the IRS has not fully resolved the on-site clinic-HSA eligibility issue, she said, noting there can be arrangements that fall between the IRS-provided examples of a design that passes muster and another that does not. “What if you are in between the examples? How much care is too much? There still is some vagueness, but at least some guidance has been provided.”

Among numerous other issues, the guidance makes clear that an employer can try to recover contributions it mistakenly made to an employee’s HSA. In that situation, the employer could approach the financial institution holding the money to ask for return of the funds. If that effort was not successful by the end of the year in which the contribution was made, the employer could include the amount as income on an employee’s W-2 statement.

The guidance also addresses another issue: Can employers provide HSA enrollees with debit cards that are coded to allow payment only of health-care expenses? The issue arose because federal law allows enrollees to withdraw funds from their Health Savings Accounts for any purpose, though they are taxed and the employee is hit with a 10% penalty tax for distributions not related to health care if the employee is under 65.

Resolving the issue, the IRS said restricting debit card payments to health-care expenses would pass muster as long as enrollees can access their HSA account through online transfers, withdrawals from automatic teller machines or writing a check. Even before the latest guidance, though, some vendors were limiting debit card use to qualified medical expenses.

“You are OK if you provide access to account funds through other means,” said Kathy Klug, director of compliance with Affiliated Computer Services in Minneapolis.

The guidance also makes clear that so long as an HSA enrollee is at least 65, the enrollee can withdraw funds from the HSA to pay for Medicare Part D prescription drug premiums. However, if the enrollee is younger than 65 and has a spouse older than 65, the spouse’s Medicare Part D premiums would not be considered eligible medical expenses, and distributions used for that purpose would be included in the enrollee’s taxable income.

Posted by Wiley Long at 05:03 PM | Comments (0)

August 27, 2008

IRS Releases Health Savings Account Comparability Rules

The IRS has issued final regulations on how employers can comply with the comparable contribution requirements for Health Savings Accounts where an employee has not established a Health Saving Account by December 31st or an employee has not notified the employer that he or she has established a Health Savings Account. The regulations also address the acceleration of employer contributions for the calendar year for employees who have incurred qualified medical expenses exceeding the employer’s cumulative Health Savings Account contributions at that time. The final regulations adopt the provisions of the proposed regulations without substantive revision.

Employee has not established HSA by December 31

The final regulations provide a means for employers to comply with the comparability requirements with respect to employees who have not established an Health Savings Account (HSA) by December 31, as well as with respect to employees who may have established an HSA but not notified the employer of that fact. To comply with the comparability rules for a calendar year with respect to such employees, the employer must comply with a notice requirement and a contribution requirement.

The final regulations also address the acceleration of employer contributions to employees’ Health Savings Accounts. For any calendar year, an employer may accelerate part or all of its contributions for the entire year to the Health Savings Accounts of employees who have incurred, during the calendar year, qualified medical expenses exceeding the employer’s cumulative HSA contributions at that time.

The regulations affect employers that contribute to employees’ Health Savings Accounts. The regulations are effective on April 17, 2008, and apply to employer contributions made for calendar years beginning on or after January 1, 2009. However, employers may rely on this guidance beginning on or after April 17, 2008.

You can read the report at: http://www.ustreas.gov/press/releases/reports/hsa_comparable_contributions_4830.pdf

And you can find more government information on Health Savings Accounts at: http://www.health--savings--accounts.com/gov-info.htm

Posted by Wiley Long at 03:40 PM | Comments (0)

August 13, 2008

Georgia Approves Health Savings Account Reforms

Gov. Sonny Perdue signed Senate Bill 383 and House Bill 977, which will make High Deductable Health Plans paired with Health Savings Accounts more affordable and available in Georgia.

House Bill 977 exempts insurers from state premium taxes for the sale of high deductible health plans with a Health Savings Account, while allowing consumers to deduct from state income taxes an amount equal to premiums paid for their Health Savings Account insurance plan.

The new legislation will affect mostly the self-employed and small business employees by providing a $250 annual tax credit for small business employers that spend at least $250 annually to enroll their employers in an HSA plan.

Senate Bill 383 compliments House Bill 977 by adding two provisions. First, Health Reimbursement Accounts (HRA) are accounts that employers may set up for employees that allow the employee to use pre-tax dollars to pay for health expenses, including health insurance. The bill states that HRA-only plans that are not sold with or packaged with individual health insurance policies are not insurance. Second, HSA plans must comply with the consumer choice option under current law. This means the insured will be able to choose any willing provider, as long as the insured pays any increase in premiums and cost.

"This legislation encourages more consumer choice by making quality, affordable health-care coverage more available," Perdue said. "More insured citizens means lower costs for all taxpayers, and preventative care means a healthier population. It will also allow small business owners to provide low cost health insurance to employees and their families."

Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 10:08 AM | Comments (0)

August 07, 2008

IRS Raises Heath Savings Account Contribution Limits

The IRS and Department of Treasury have elevated the ceiling for contributions to tax-deductible Health Savings Accounts.

By increasing maximum Health Savings Account contributions for 2009, the IRS and Department of Treasury have made it more attractive for individuals and employers to consider Health Savings Accounts when looking at health insurance options. Money contributed to a Health Savings Account is tax-deductible, and can be used to pay qualified medical expenses tax-free.

The contribution limit has been raised to $3000 for individuals and $5950 for families.

New contribution limits for 2009 are $3000 for families and $5950 for individuals. This is up from 2008 limits of $2800 for individuals, and $5800 for families. Individuals who are 55 or older are also allowed to make up to an additional $1,000 in 2009 in "catch up" contributions.

America's Health Insurance Plans (AHIP) data shows that enrollment in high-deductible health plans eligible to be tied with Health Savings Hccounts grew to 6.1 million in 2007, growing fastest in the small group market.

The higher contribution limits make Health Savings Accounts an even better value than before, which will no doubt just accelerrate the movement towards these types of plans. Not only are HSA-qualified health insurance plans less expensive, but the tax-deduction really makes them a no-brainer, particularly for people who are paying for some or all of their own health insurance costs.

Health Savings Accounts are similar to Individual Retirement Accounts (IRAs). The account is owned by the individual HSA holder, it is portable and is not dependent on continued employment with a particular employer, and money in the account grows tax-deferred. The big advantage over an IRA is that only with an HSA can money can be withdrawn from the account tax-free to pay for qualified medical expenses.

Most of our customers keep enough of their HSA money to cover their deductible in an easily accessible savings account. As their savings grow, they'll usually invest additional HSA funds in mutual funds or other investments with larger growth potential.

Individuals have until December 1 to obtain a qualifying high-deductible health plan in 2008 if they wish to take the deduction on 2008 taxes. Contributions can be made as late as April 15th.

The recent HSA contribution increases announced by the Internal Revenue Service means that policy holders can get an even larger tax deduction when maximizing their HSA contribution. This change will make these plans even more attractive as millions of people continue to transition from conventional co-pay health insurance plans, to high deductible HSA-qualified plans.

Posted by Wiley Long at 03:14 PM | Comments (0)

July 09, 2008

Defending Health Savings Accounts

Greg Scandlen of Consumers for Health Care Choices set the record straight on Health Savings Accounts in his recent testimony to the Health Subcommittee of the Ways and Means Committee of the US House of Representatives. Given that this is the very committee trying to destroy Health Savings Accounts for honest Americans, his remarks are especially timely.

Here's an excerpt from his testimony:

...Most of what you have been told in the testimony to date is either mistaken, based on suppositions or surveys of uninformed people, or simply irrelevant to Health Savings Accounts. For example –

* You were told that lower-income people cannot afford the out-of-pocket responsibility that comes with an HSA. You were not told how those same people could afford the higher premiums that are required to avoid that cost. In fact, money that is paid to an insurance company for first-dollar coverage is money that is lost forever. Lowering the premium and using that saving to pay directly for services gives the low-income consumer a chance to save money that would otherwise be lost.

* You were told that the tax break associated with Health Savings Accounts is unprecedented and a boon to the "wealthy." In fact, the tax treatment of Health Savings Accounts is precisely the same tax treatment afforded to employer-sponsored health insurance. Premiums are untaxed and benefits are untaxed. It is true that the "wealthy" get a larger tax benefits than the unwealthy, but that is the case for employer-sponsored comprehensive coverage as well as for Health Savings Accounts. Further, the opportunity to save, say, $2,000 a year that would otherwise go to an insurance company is of far greater benefit to the low-income worker who earns $20,000 a year than to the wealthy executive who makes $200,000, regardless of the tax treatment.

* You were told that "the sick" do not benefit from Health Savings Accounts because of the higher out-of-pocket responsibility. In fact, both the healthy and the sick have less out-of-pocket exposure with an HSA, a point that was well documented in a recent Health Affairs article. In fact, Health Savings Accounts limit a patient's out-of-pocket exposure, something that is not true for the Medicare program, for instance.

* You were told that most health care spending takes place above the deductible associated with an HSA, so they will not have "a significant effect on overall spending." This is probably true, but irrelevant. Health Savings Accounts are having a profound effect on lower-cost routine spending and that is significant by itself. Other strategies are needed for high-cost services with or without an HSA.

* You were told that many people with a high-deductible health plan do not open up an HSA. That, too, is true but irrelevant. The HSA itself is attractive for those people who are able to get a tax benefit from passing their direct payments through the account. Other people, especially those who pay no income taxes, may find it more suitable to simply pay cash at the time of services or to keep their funds in some other, non-HSA, account. Further, there is likely to be a lag time between the point of enrollment and opening up that account. This is not a problem.

* You were told that some people who have to pay directly for care or for prescription drugs may fail to do so to save the money. That also may sometimes be true. But there is never any guarantee that people will always fill their prescriptions and take their medications regardless of the financing scheme. In fact, we know that many health conditions are caused or aggravated by patient behavior under all health insurance systems. But, to the extent that people with an HSA are more knowledgeable and more invested in their own care, their compliance will be better than it is for other benefit programs. And that is precisely what we are seeing in the market.

Given that Health Savings Accounts are becoming increasingly popular (with over 6 million Americans currently enrolled, an increase of 35% from last year), it's important that lawmakers understand the tremendous benefits they offer for Americans seeking the best value for their health care dollar.

Let's just hope that the committee was listening closely!

Posted by Wiley Long at 09:15 AM | Comments (0)

June 27, 2008

Is Congress Messing with Your Health Savings Account

In April, House Democrats passed legislation that would impose onerous and unnecessary reporting requirements on people with tax-free Health Savings Accounts. As of January, more than 6 million Americans have Health Savings Account coverage. That includes nearly 640,000 Californians, or about 3 percent of all Californians under age 65. In other states, Health Savings Account qualified insurance plans cover nearly 1 in 10 people under age 65.

Current law requires Health Savings Account holders to document their withdrawals in the event of an IRS audit. The new legislation would require every Health Savings Account holder to document every HSA-qualified withdrawal, every time they file their taxes.

Some politicians just don't want workers to control their own earnings and have launched an all-out assault on Health Savings Accounts. That's right: Congressional Democrats are trying to find a way to make Americans' medical bills and tax returns even more complicated.

Led by Health Subcommittee Chairman Pete Stark, D-Calif., supporters claim the legislation seeks only to prevent people from claiming a tax break for nonqualified expenses. Stark cites reports that "HSA funds appear to have been spent on escort services, at casinos and bowling facilities."

Yet Congress' own Government Accountability Office found that 90 percent of HSA withdrawals are applied directly to qualified medical expenses. Even if the remaining 10 percent were spent at brothels and bowling alleys, federal law does not require funds contributed to an HSA to be used only for medical care. It requires only that withdrawals not exceed qualified medical expenses, or that the account holder pay taxes and a penalty on any excess withdrawals.

In either case, random audits police compliance. More importantly, HSA critics haven't produced any actual evidence of unlawful withdrawals.

The real reason for the anti-HSA legislation lies elsewhere.

The federal government has traditionally offered workers a large tax break for job-based health benefits. In practice, however, that tax break effectively robs you of control over a large chunk of your earnings: the money your employer puts toward your health insurance. For the average insured family, that's about $9,000 per year. The law also robs you of control over your coverage decisions.

In 2004, Congress extended that tax break to employee-owned Health Savings Accounts, enabling workers to reclaim ownership of a portion of those earnings.

If a family obtains a high-deductible health plan, he or his employer can contribute as much as $5,800 to an HSA, tax-free. The family owns the account, which stays with them from job to job. So long as they spend that money on medical care, HSA funds are never taxed. Otherwise, HSA rules are identical to those for traditional IRAs.

Some politicians just don't want workers to control their own earnings and have launched an all-out assault on Health Savings Accounts.

Last week, Stark complained, "The total value of all Health Savings Accounts contributions reported to IRS in 2005 was about twice that of withdrawals, suggesting an interest in it more as a shelter than vehicle to obtain needed health care or supplement inadequate coverage."

Stark is shocked — shocked! — that workers are using their Health Savings Accounts as... a savings vehicle.

Stark further alleges that Health Savings Accounts "are an effective tax shelter for people whose average incomes are nearly triple that of average tax filers."

True, Health Savings Accounts provide a tax break that gets more valuable as earnings rise. (That's because income tax rates rise with income.) Yet the tax break for employer-controlled coverage provides identical tax breaks to millions more high-income earners. Where is the outrage over that tax loophole?

HSA opponents offer no evidence that unlawful HSA withdrawals are a serious problem, and they can't say why random audits aren't enough to deter them. They are highly suspicious when Americans take money out of their Health Savings Accounts — but equally suspicious when they leave it in. And tax breaks for the wealthy appear to be kosher, unless they let workers control their earnings.

All of which leaves Stark and his fellow travelers open to the charge that what really bothers them is the fact that Health Savings Accounts let individuals control their own money.

Posted by Wiley Long at 09:31 AM | Comments (0)

June 25, 2008

Many Health Savings Account Owners Make IRA Transfer

Eligible individuals can now make a one-time tax-free transfer of individual retirement account (IRA) funds to start a Health Savings Account (HSA) under the guidelines set down in IRC Sec. 223. Under the amendment, employees can use what was originally in their IRA to pay for medical benefits without having to pay for the 10% additional tax under IRC Sec. 72(t).

The legislation also allows you to use of existing funds in your IRA as a source of tax-free contribution to your existing Health Savings Account.

There are many benefits of this strategy. It makes a lot of sense to transfer money from your IRA to your HSA, particularly if you don't have enough cash on hand to fully fund it for the year. Once that money is transferred the HSA, you can spend it on medical expenses without ever being taxed on the money. This is a tremendous financial benefit.

The owner of an HSA is also eligible for a second transfer within the same taxable year if he has a self-only high deductible health plan (HDHP) during the period of the IRA transfer, and within that same period purchases family HDHP coverage. The fund distribution remains tax-free. This strategy has been very popular with our customers. This is a great provision for someone who wants to get their account fully funded, so they know they've got the money to cover a deductible. That way, they can carry a higher deductible, lower-priced health insurance plan.

There are several conditions for eligibility for the tax advantages under the 2006 amendment. The individual making the transfer must remain eligible within 12 months of the IRA to HSA funding distribution, referred to as the "testing period." If within that period, the individual becomes ineligible, then the transferred amount will be subject to the usual income taxes. Furthermore, the amount transferred will be deducted from the maximum allowed HSA contribution for that year.

Having money from an IRA work for immediate medical needs frees up some funds that would otherwise go to tax payments. The value of an HSA is especially high when the account holder is still productive, to stave off the pressures of high taxation and rising medical care costs.

Transferring funds from an IRA to an HSA enables individuals to reduce their potential tax liabilities, and to also lower their health insurance premiums by switching to higher deductible plans.

Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 02:44 PM | Comments (0)

June 15, 2008

How Health Savings Accounts are Taxed

Contributions by an individual to a Health Savings Account are deductible in calculating the individual's adjusted gross income (AGI) (that is, they are above-the-line deductions), whether or not he or she itemizes deductions. If an employee makes contributions to a Health Savings Account in the form of pretax salary reductions under a cafeteria plan, they are excluded from income for purposes of federal income and employment taxes. Contributions made by a family member to a Health Savings Account on behalf of an individual are also deductible in determining the individual's AGI, whether or not he or she itemizes deductions.

Hal's wife has given birth to twins and is no longer working. To help out, Hal's father contributes $500 to Hal's Health Savings Account (HSA). Hal can deduct the $500 on his own tax return, even though the money came from his father.

Employer contributions to an HSA on behalf of an employee are treated as employer-provided coverage for medical expenses. They are excluded from the employee's income for purposes of income and employment taxes and are deductible by the employer.

Distributions

In general, an HSA participant may withdraw funds from the HSA at any time for any purpose. This contrasts with FSAs and HRAs, which only allow reimbursements for medical expenses. However, the use of HSA distributions, as well as the age of the participant and some other circumstances, determines how the money is taxed. Distributions used exclusively to pay for qualified medical expenses of the participant, or of his or her spouse or dependents, are excluded from gross income (that is, tax-free). On the other hand, any distribution or portion of a distribution not used exclusively to pay for qualified medical expenses is included in the participant's gross income and subject to an additional 10 percent penalty tax.

Molly has accumulated $6,000 in her HSA. She incurs $1,500 of dental expenses not covered by insurance, and she uses money from her HSA to pay them. Because this money is spent on qualified medical expenses, it is tax-free. Roger also has $6,000 in his HSA. He needs $1,500 to help cover college expenses for his daughter Becky. Roger can take this money from his HSA, but because he is not using it for qualified medical expenses, he must include it in his gross income and pay an additional $150 in penalty tax (10 percent of $1,500).

An exception applies to those 65 and older. Although Health Savings Account distributions not used for HSA qualified medical expenses are included in their income, such distributions are not subject to the 10 percent penalty tax.

Charlie, age 67, contributed to an HSA for several years before his retirement, and his account now holds $7,000. Charlie faces a series of expensive repairs to his home, and he withdraws $2,500 from his HSA to help pay for them. This money must be included in Charlie's income because it is used for nonmedical purposes, but since Charlie is over 64 he does not have to pay the 10 percent penalty tax.

To learn more about Health Savings Accounts, visit: http://www.health--savings--accounts.com

Posted by Wiley Long at 05:30 PM | Comments (0)

June 06, 2008

Using Your Health Savings Account for Retirement

Many individuals are now using Health Savings Accounts as a way to supplement their traditional retirement accounts, such as 401ks. A Health Savings Account (HSA) allows users to pay for health related expenses, such as office visit copays, deductibles, and medication. Users can also use the accounts to save for future medical expenses, premiums for health insurance, or even Medicare premiums.

In order to participate in an HSA, a person must be covered by a high-deductible health plan (HDHP), which is a type of insurance plan that typically has lower premiums than a traditional plan, but has a much higher deductible.

The current maximum contributions for 2008 are $2,900 for individuals and $5,800 for families and this is done on a pre-tax basis. Money deposited in the account grows tax free and is not taxed when used for an eligible expense either. Health Savings Accounts differ from flexible spending accounts (FSAs) in that money in the account can accumulate over the years and is not required to be spent or lost each year. Health Savings Accounts offer a triple tax advantage and are also portable and not tied to a specific employer as with an FSA.

In terms of using an HSA as a source of retirement income, people 55 years of age and older are eligible to make catch-up contributions to their account. For 2008, an extra $900 is permitted, then $1,000 in 2009 and so on. Once the person hits 65, distributions from the account for non-medical related items are taxed as normal income would be. However, unlike an IRA, there are no mandatory age-related distributions from an HSA, so money can be allowed to grow indefinitely.

Learn more about Health Savings Accounts and how you can use the to supplement your retirement savings at: http://www.health--savings--accounts.com

Posted by Wiley Long at 03:25 PM | Comments (1)

May 11, 2008

HSA for America Opposes Health Savings Account Substantiation

HSA for America strongly opposes any proposal that would require substantiation of Health Savings Account withdrawal transactions or any radical change to the current administration of Health Savings Accounts.

Health Savings Accounts are a dynamic, consumer-friendly and increasingly popular health insurance product enjoyed by millions of Americans. Current law already requires individuals with an HSA to keep and supply receipts to the Internal Revenue Service when requested. It is the individual's responsibility to keep good tax records--through self reporting--just as they do with charitable contributions and other tax deductions.

Imposing substantiation rules on Health Savings Accounts will add enormous costs to Health Savings Accounts, which will inevitably be passed on to the consumer. One of the benefits of consumer-directed health care products like Health Savings Accounts is the removal of unnecessary overhead from the health care process, which has proven to lower administrative costs. Right now, 90% of HSA withdrawals are done electronically through a debit card, ATM or check. The same proportion (90%) of withdrawals from an FSA is done by paper/manually. Adding this new requirement would bring HSAs back into the world of paper/manual transactions thus increasing costs and making it more burdensome for the consumer.

HSA substantiation also fails to recognize that HSAs and Flexible Spending Accounts (FSAs) are inherently different products and should not be treated the same. The HSA is an individually owned account and FSAs are an employer group-owned account. Substantiation of FSAs currently benefits employers because they get to keep any unused funds in their employees' FSA accounts at the end of the year. However, unused funds in an HSA accrue for future health care expenses for the account holder.

Health Savings Accounts place significant responsibility with the account holder, which is an attraction for the beneficiary and the employer. Ironically, at a time when Congress is seeking to enhance the use of Health Information Technology to help reduce costs and improve quality, efforts to radically change the oversight and administration of Health Savings Accounts in such a way would be a giant leap backwards.

Requiring substantiation on HSA transactions is a bad idea that would lead to a significant decrease in electronic transactions, longer wait times for reimbursement for individuals and higher administrative costs. We look forward to working with Congress and the administration on making the cost of health care more affordable for all Americans (not less) because insuring more Americans is in everyone's best interest.

Posted by Wiley Long at 06:54 PM | Comments (0)

May 01, 2008

Aetna To Offer Health Savings Account Plans To Conn. Businesses

Aetna will begin offering individual health insurance policies to about 40,000 businesses and through 79 Chambers of Commerce in Connecticut, under an agreement with the Chamber Insurance Trust.

The arrangement is aimed at sole proprietors of businesses and workers who don't have insurance through an employer, and could help reduce the number of uninsured residents in the state, said Stephen Glick, administrator of the trust.

The trust is an alliance of chambers of commerce across Connecticut and Western Massachusetts, which was created in 1992 to combine their buying power for insurance.

The trust already offers employer-based health plans from ConnectiCare, and Medicare Advantage plans from Health Net.

Aetna will offer a variety of individual plans through the trust, including preferred provider plans (PPOs), high-deductible plans that are compatible with Health Savings Accounts, and an optional dental PPO. Aetna will also provide plans that combine preventive care and high-cost coverage, such as for hospital stays and outpatient surgery.

All of the individual plans are subject to medical screening to determine eligibility.

Posted by Wiley Long at 10:50 AM | 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)

March 16, 2008

Important Tax Filing information for those with Health Savings Accounts

The IRS has recently released an updated version of Publication 969 for use in preparing tax returns for the 2007 fiscal year. Publication 969 pertains to tax favored health accounts, including information regarding Health Savings Accounts, Health Reimbursement Arrangements, Flexible Spending Accounts, Archer Medical Savings Accounts, and Medicare Advantage Medical Savings Accounts.

The updated document reflects the new 2007 limits for Health Savings Accounts and incorporate changes made by the Tax Relief and Health Care Act of 2006 which took effect in 2007.

Among these changes were the elimination of the annual HDHP deductible cap on Health Savings Account contributions and the addition of the “last month rule” which treats individuals who become HSA eligible on Dec 1st as being HSA eligible for the entirety of the tax year. There is also updated information on qualified HSA distributions from Flexible Spending Accounts and Health Reimbursement Arrangements, distributions from IRAs, and instructions on how to properly report any 10% tax penalties on 1040 forms.

To read IRS Publication 969, click here.

Posted by Wiley Long at 02:05 PM | Comments (0)

February 01, 2008

Georgia to Make Health Savings Accounts More Attractive

Georgia lawmakers have unveiled proposed legislation that would make health insurance more affordable in the state of Georgia

The legislation would encourage small businesses to provide their employees with high-deductible health plans, coupled with Health Savings Accounts. It will also allow Georgians to deduct health insurance premiums from their state taxes if they have a high-deductible health insurance plans, said State Sen. Judson Hill (R-Marietta).

If you are a reader of this blog, you know a high-deductible health plan is an insurance plan that offers consumers lower premiums and higher deductibles. Health Savings Accounts allow people to pay for health care with tax-free dollars.

Estimates indicate about 500,000 Georgians could become insured if the reform legislation is passed by the 2008 Georgia General Assembly.

"This is a market based solution focused on empowering individuals and rewarding them for making healthy choices," said Hill, who authored the legislation. "This plan will make affordable health insurance more accessible for the uninsured and working families."

The legislation would include rebates for consumers who have high deductible plans with health savings accounts, when they engage in healthy behavior such as smoking cessation, weight loss or controlling diabetes.

The legislation would also incentivize companies to offer their employees HSAs. Employers with up to 50 employees could take a tax credit of $250 per employee that enrolls in a HSA eligible high-deductible plan. This legislation would also allow consumers to deduct premiums from state income taxes, if they are not already deducting premiums from federal income taxes. This would apply to consumers who purchase a high-deductible health insurance plan as an individual, or through an employer.

This legislation will be a great benefit for all Georgians. Hopefully more states and the federal government will follow Georgia's lead in making HSA insurance plan premiums tax deductible.

Posted by Wiley Long at 01:39 PM | Comments (0)

January 09, 2008

Getting Health Savings Accounts for Poor Individuals is Being Tested

The popularity of Health Savings Accounts for the poor individuals will be put to the test in Indiana under a program recently approved by the Bush administration. Under the plan, anyone making $20,000 or less a year could get health coverage for about $19 a week.

President Bush has long pushed Health Savings Accounts as a way to slow the rising cost of medical care and extend basic coverage to the uninsured.

Here are the details of the Health Savings Account program:

Under the Indiana program, eligible residents can pay up to 5 percent of their incomes into state-subsidized "Personal Wellness and Responsibility Accounts" that cover their initial medical expenses up to $1,100. Once that deductible is reached, private insurance purchased by the state kicks in.

Eligibility is limited to adults with incomes below twice the federal poverty level. The poverty level is now $10,210 for an individual and $20,650 for a family of four.

The waiver is the first of its kind for the Medicaid program, a state-federal partnership that provides health coverage to the poor and disabled.

Indiana officials said they've already received inquiries from more than 1,000 people interested in applying.

The program will be monitored closely because of the philosophical divide among lawmakers about the value of health savings accounts for the poor. Many say Health Savings Accounts work best for healthier and higher-income people with low medical expenses.

Judith Solomon, senior fellow at the Center on Budget and Policy Priorities, said she doubts that many people making $10,000 a year can afford to pay $500 for health insurance. She said that about 50,000 people lost Medicaid coverage in Oregon after that state got permission to raise insurance premiums to $20 a month.

"You can say it's better than nothing, but I just don't see how many of those folks will be able to afford it," Solomon said.

Indiana has allocated up to $114 million for the program in 2008 after its legislature voted to raise state taxes on cigarettes from 55.5 cents to 99.5 cents a pack.

The state is encouraging employers to contribute to their workers' accounts. Any money left at the end of the year can be rolled over to offset the following year's contributions if the beneficiary obtains certain screenings and services that help prevent illness.

"This is a big step forward that will lead to approximately 120,000 uninsured Hoosiers having the peace of mind of health insurance," said Indiana Gov. Mitch Daniels, a Republican who once served as Bush's director of the Office of Management and Budget.

Find out if a Health Savings Account is right for you at: http://www.health--savings--accounts.com

Posted by Wiley Long at 07:22 AM | Comments (0)

November 21, 2007

Health Savings Account Growth Continues

Growth in Health Savings Accounts (HSAs) continues unabated according to third-quarter figures gathered from account custodians. Initial returns from Information Strategies, Inc.'s quarterly survey of financial institutions indicate that the country is on track toward almost 8 million custodial accounts by the beginning of 2008.

With the process of education about the uses and benefits of Consumer Directed Healthcare (CDH) options finally taking hold, many individuals and companies are accepting CDH employer options, including Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs).

Industry stakeholders are worried that a Democratic sweep in the November 2008 elections will put these efforts in jeopardy, as leading candidates in that party support some form of national, universal healthcare plan.

One counter-balance to this scenario is the popularity of Health Savings Accounts in key swing states: Ohio, California, Texas and Florida. Combined, they are enough to swing the electoral-college vote.

At the same time, the growing support for HSAs by the so-called Blues healthcare insurance companies, combined with the expanding savings rate (expected to top $10 billion with estimates as high as $13 billion at the beginning of January) will make HSAs hard to kill in a new Congress.

Posted by Wiley Long at 08:03 AM | Comments (0)

August 08, 2007

New Health Savings Account Program Receives Federal Approval

A program allowing approximately 1,000 poor and disabled South Carolina residents to try out Health Savings Accounts has become the first in the nation of its kind to get federal approval.

The pilot program was designed to curb out of control spending within Medicaid, the state-federal health insurance program for the poor, disabled and elderly. Critics have said Medicaid recipients who use all the money in the Health Savings Accounts will not be able to afford additional medical care.

The program allows some Richland County Medicaid recipients $2,500 to cover deductibles for doctor's office visits and other medical care. It also provides children with $1,000 accounts, said Jeff Stensland, state Department of Health and Human Services spokesman.

If money is left in the Health Savings Account at the end of the year, up to 75 percent of it can be used for other health expenses, education or job training, or rolled over to the next year, Stensland said.

However, if the account is exhausted, Medicaid recipients have to pay 10 percent of their health care costs. However, there is a safeguard where if costs reach a higher threshold, recipients are again fully covered by the typical Medicaid program, Stensland said.

Stensland said the pilot program will be limited to 1,000 people during the next five years. The federal Centers for Medicare and Medicaid Services will review the program and could allow it to be expanded statewide, Stensland said.

A spokesman for the federal agency did not immediately respond to a telephone message.

Also, the Republican governor's office said the federal agency approved a statewide program that allows Medicaid recipients to enroll in an insurance program similar to the one used by state workers and retirees. The Medicaid recipients will get some expanded coverage, such as annual physicals and health screenings, Stensland said.

They will also get regular updates on how much their health care costs. "We have no idea what the participation will be," Stensland said.

Both programs are expected to be operating by the end of the year.

News of the programs came as the state's Health and Human Services Department was being criticized about a new transportation contract for Medicaid.

On Monday night, many people spoke out at a public hearing in Greenville against the new service, saying it was untimely and left the elderly and disabled without rides in some cases.

The agency said it changed the transportation system to improve accountability and efficiency after the previous system of contracting with county agencies brought high costs, fraud and abuse.

Lt. Gov. Andre Bauer said part of the problem was the head of governor's Cabinet agency, one of the South Carolina's largest, left in April. An interim replacement was named when former director Robbie Kerr left the agency, but Susan Bowling will leave the department in a couple of weeks, too.

"I respectfully renew my request that you act with dispatch to name a director of the Department of Health and Human Services," Bauer wrote Sanford on Tuesday. "That vacancy, now in its fourth month, has resulted in a public perception that no one is responsible or accountable for decisions by this $4 billion agency that is placing senior citizens and people with disabilities in danger."

"The lieutenant governor needs to get his facts right," Sanford spokesman Joel Sawyer said.

Kerr has been gone for two and a half months, not four, and the acting director is still there, Sawyer said.

The letter, delivered to reporters before Bauer's concerns had been brought to the agency, speaks more to Bauer's political motivations than his concern about transportation contracts, Sawyer said.

Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 01:58 PM | Comments (0)

June 27, 2007

Health Savings Account Comparability Regulations Proposed by IRS

The IRS has issued proposed regulations on how employers can comply with the comparable contribution requirements for Health Savings Accounts where an employee has not established a Health Savings Account by December 31st or an employee has not notified the employer that he or she has established a Health Savings Account.

The regulations also address the acceleration of employer contributions for the calendar year for employees who have incurred qualified medical expenses exceeding the employer's cumulative HSA contributions when the expenses were incurred. In general, these proposed regulations affect employers that contribute to employees' Health Savings Accounts.

Employers may rely on these regulations for guidance pending the issuance of final regulations. Alternatively, until the publication of final regulations, employers may continue to rely on the last sentence of Q&A-6(a) of Proposed Reg. §54.4980G-4, which provides that an employer is not required to make comparable contributions for a calendar year to an employee's HSA if the employee has not established an HSA by December 31st of the calendar year.

Employee has not established a Health Savings Account by December 31

The proposed regulations provide a means for employers to comply with the comparability requirements with respect to employees who have not established an HSA by December 31, as well as with respect to employees who may have established an HSA but not notified the employer of that fact. To comply with the comparability rules for a calendar year with respect to such employees, the employer must comply with a notice requirement and a contribution requirement.

Notice requirement

Pursuant to the proposed regulations, to comply with the notice requirement, an employer must provide written notice:

- to all such employees (as discussed above);
- by January 15 of the following calendar year;
- that each eligible employee who, by the last day of February, both establishes an HSA and notifies the employer that he or she has established the HSA, will receive a comparable contribution to the HSA.

The notice may be delivered electronically. In addition, the proposed regulations provide sample language that employers may use as a basis in preparing their own notices.

Contribution requirement

For each such eligible employee who establishes an HSA and so notifies the employer by the end of February, the employer must contribute to the HSA by April 15 comparable contributions (taking into account each month that the employee was a comparable participating employee) plus reasonable interest.

Acceleration of employer contributions

The proposed regulations also address the acceleration of employer contributions to employees' Health Savings Accounts. For any calendar year, an employer may accelerate part or all of its contributions for the entire year to the HSAs of employees who have incurred, during the calendar year, qualified medical expenses exceeding the employer's cumulative HSA contributions at that time. If an employer accelerates contributions for this reason, these contributions must be available on an equal and uniform basis to all eligible employees throughout the calendar year and employers must establish reasonable uniform methods and requirements for acceleration of contributions and the determination of medical expenses. An employer is not required to contribute reasonable interest on either accelerated or non-accelerated HSA contributions.

The proposed regulations also provide that an employer that accelerates contributions to the Health Savings Accounts of its employees will not fail to satisfy the comparability rules because an employee who terminates employment prior to the end of the calendar year has received more contributions on a monthly basis than employees who work the entire calendar year.

Comments and public hearing

Written or electronic comments on these proposed regulations must be received by August 30, 2007. Send submissions to: CC: PA: LPD: PR (REG-143797-06), Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044.

A public hearing has been scheduled for September 27, 2007, beginning at 10 a.m. in the Auditorium, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC. (72 FR 30501, June 1, 2007.)

Posted by Wiley Long at 09:53 AM | Comments (0)

June 21, 2007

Another Health Savings Account Bill Introduced

U.S. Rep. Charles Boustany, R-Lafayette, introduced legislation to expand access to Health Savings Accounts.

The legislation would build intergenerational "wealth for health" savings by allowing adult children to inherit health investment plans. The Promoting Health for Future Generations Act of 2007 (H.R. 2639) also aims to remove current hurdles that limit veterans and seniors in Medicare from accessing Health Savings Accounts.

"Health Savings Accounts have greatly expanded coverage, but this bill makes them more practical for the working families, veterans, and Medicare seniors who benefit from them," said Boustany, a retired cardiovascular surgeon. "By allowing adult children to inherit a Health Savings Account in the same way that a spouse can, this measure will help working families build 'wealth for health' savings that can be passed on to other generations."

Under current law, families and individuals are unable to deposit their own money in a Health Savings Account after they receive care through Medicare or the VA. Boustany's legislation would eliminate this inequity, providing for increased growth and greater control over personal Health Savings Accounts.

"In removing these barriers, we are putting healthcare decisions back in the hands of the seniors and veterans who know best," Boustany added. "When you consider Medicare's looming financial problems, the affordable coverage and savings contained in this bill make it practical for patients and providers alike."

Posted by Wiley Long at 10:04 AM | Comments (2)

June 18, 2007

New Bill to Include Domestic Partners to Health Savings Account Tax Breaks

New legislation has been introduced in the U.S. Senate that would extend the same favorable Health Savings Account tax treatment to health insurance coverage offered to employees' domestic partners that employer coverage provided to employees' spouses and dependents now receive.

Under the measure introduced Wednesday by Sens. Maria Cantwell, D-Wash., and Gordon Smith, R-N.H., the cost of employer-paid coverage provided to a domestic partner or other nondependent, nonspouse beneficiary, would not be added to an employee's taxable income.

Additionally, employees could withdraw on a tax-free basis funds in their Health Savings Accounts to be reimbursed for medical expenses incurred by a domestic partner. Currently, such withdrawals would be taxable to the employee, with an additional 10% penalty tax imposed.

The measure also would exclude the value of coverage in determining employees’ wages for Social Security payroll tax purposes, as well as permit special trusts—known as voluntary employees’ beneficiary associations—to provide health insurance to employees’ domestic partners without the trusts losing their tax-exempt status.

A group of nearly three dozen major employers—including such well-known companies as Coors Brewing Co., General Mills Inc. and Hewlett-Packard Co. have banded together through the Business Coalition for Benefits Tax Equity to support the bill, said James Delaplane, who represents several members of the coalition and is a partner with Davis & Harman L.L.P. in Washington.

Increasingly, employers have decided to extend health care coverage to employees' domestic partners because they believe it will help them to attract and retain employees, Mr. Delaplane said. “Now, it is time for the tax code to catch up,” he said.

Posted by Wiley Long at 10:16 AM | Comments (0)

June 07, 2007

IRS to Accelerate Health Savings Account Contributions

The IRS has proposed regulations proposed that would allow employers that contribute to employees' Health Savings Accounts to accelerate contributions for employees whose medical care expenses are greater than what the employer has so far contributed to the Health Savings Account during the year.

Such an acceleration would enhance the appeal of Health Savings Accounts by reducing employees' concerns that their Health Savings Account could be exhausted if they incur big medical bills early in the year before employers make all of their contributions.

The proposed rule would apply to Health Savings Accounts that are not part of Section 125 programs, in which employees make pretax contributions to their Health Savings Account. Benefit experts say such an acceleration of employer contributions to Health Savings Accounts that are part of Section 125 programs already is permitted.

Posted by Wiley Long at 09:10 AM | Comments (0)

May 16, 2007

2008 Health Savings Account Contribution Limits Set to Increase

The United States Treasury Department has posted the 2008 Health Savings Account contribution limits on its website at:

http://www.treasury.gov

In 2008, the maximum contribution that can be made for individuals with single coverage will be $2,900, up from $2,850 this year, and the maximum contribution for family coverage will rise to $5,800, up from $5,650, according to the document posted.

Additionally, the maximum out-of-pocket expense — including deductibles — that individuals with single coverage can be required to pay will rise to $5,600 next year, up from $5,500 in 2007, and to $11,200 for family coverage.

The new Health Savings Account limits reflect increases in the cost of living are being posted earlier this year due to changes that went into effect late in 2007.

Learn more about Health Savings Accounts and all the health and tax advantages they can provide you at HSA for America.

Posted by Wiley Long at 09:57 AM | Comments (29)

April 20, 2007

Pre-Tax Health Savings Account Contributions

Federal employees enrolled in high-deductible health plans will be able to use pre-tax dollars to schedule automatic contributions to their Health Savings Accounts by the beginning of 2008.

Currently, employees with HSA plans make contributions on their own with after-tax earnings and then declare the contributions on their annual tax returns to get the tax benefit. The new service will allow employees to schedule the payments so they're automatically drafted from their paychecks before taxes are taken out.

Payroll providers will roll out the pre-tax service gradually through Jan. 1.

After their covered payroll provider switches to the new system, employees will be able to make pre-tax contributions using the same method they would use to establish other allotments, such as through the payroll Web sites Employee Express or MyPay. Employees will be able to modify their allotments at any time.

For 2007, employees can set aside $2,850 in a Health Savings Account for single coverage or $5,650 for family coverage, while those who are 55 or older can make an additional catch-up contribution of $800. The maximum contribution includes the premiums contributed to the Health Savings Account by each health plan.

Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 11:05 AM | Comments (0)

April 11, 2007

Despite Congressional Doubts, Health Savings Accounts Will Continue to Grow

Amid growing Congressional pressure to make some changes in Health Savings Account regulations, a new forecast on their expanding usage and popularity may give some political leaders pause.

Information Strategies, Inc. (ISI) has issued a new estimate on year-end and future growth based on interviews with Health Savings Account, Consumer Driven Healthcare and more traditional plan users as well as corporate and custodial managers.

"Many people are just now learning about the Health Savings Account changes effected in the closing days of the last congress and they are taking advantage of the new higher savings limits and the greater flexibility in rules," said JoAnn M. Laing, ISI's President & CEO.

ISI expects these changes, which some in Congress indicate they would like modified, to drive the popularity of Health Savings Accounts even higher.

Speaking at a Washington, DC meeting of industry leaders, Laing provided the following estimates of sector metrics at the end of 2007:

-- The number of Health Savings Accounts will reach 8 million.
-- Deposits in custodial accounts will total $13.6 billion at year-end.
-- Average accounts will pass $1,700 mark, with those accounts being in existence two or more years hovering at $4,400.
-- 22% of employers will offer HSAs.
-- More than 40% of all companies will fund 50% or more of the first year's deductible.
-- New HSA-covered lives will exceed eight million, bringing the HSA-insured total to 18 million.
-- Number of institutions offering HSA custodial accounts will pass 1,600.
-- Investment options for custodial accounts will become more numerous and diverse with major giants such as Fidelity taking a leading role.
-- Online portals and other integrated offerings will surge in the fourth quarter.

Laing said her company this year had surveyed more than 400 custodial institutions, 2,300 companies as well as 2,000 Americans about their HSA plans. In the past 30 months, the company has interviewed or survey almost 20,000 Americans.

"What we are seeing is a growing desire by respondents to take more control of their healthcare and retirement efforts," she added.

"Clearly HSAs, along with Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs) are gaining popularity both with individuals and employers of all sizes," Laing said.

"HSAs are popular with individuals and smaller company managers as a healthcare insurance alternative and even the larger firms such as Deere are jumping in with plans that require more effort on the part of employees but give them some part of their insurance premiums back in the form of savings," Laing said.

Posted by Wiley Long at 11:03 AM | Comments (0)

April 01, 2007

Using Your Health Savings Account to Buffer the Coming Medicare Insolvency

The Medicare Trust Fund will soon be out of money, and there will be no practical way for the government to continue to provide the level of benefits that current Medicare recipients receive. The result will be serious rations, waiting periods, and a reduction in benefits. If you wish to maintain your medical freedom, and have access to a high level of medical service, you must be prepared to pay for it yourself. The best strategy is to take good care of your health, and to build up your medical retirement fund as large as possible by using a Health Savings Account.

The Coming Medicare Insolvency

The total federal debt is now over $10 trillion. But if you also include the current unfunded liabilities of social security, Medicare, and other programs, the total federal debt is at least $54 trillion. This number has been confirmed in three separate studies - by the American Enterprise Institute, the National Center for Policy Analysis, and the Brookings Institution.

It is difficult to get a grasp of a number that big. That's $180,000 per person currently living in the United States. It is four times the U.S. Gross Domestic Product, the measure of the final value of all goods and services produced in this country in the course of a year.

As the program is currently structured it is unsustainable, and the fund is expected to be depleted by 2018. That is a mere 11 years from now. The shortfall in Social Security and Medicare revenues will continue to increase as the years go by - it will exceed $2 trillion by 2030. At that point, half of all tax dollars will have to go to Social Security and Medicare.

That clearly can't happen. Instead, the system will face massive cuts in benefits, probably in addition to large tax increases.

Who Will Pay Your Medical Expenses During Retirement?

So will Medicare be there for you? It depends on how old you are. Unless you are retiring in the next couple years, I certainly wouldn't count on it, particularly if you want to insure that you have access to high quality medical care during your retirement years.

Last year Fidelity Investments reported that the average couple retiring in 2006 would need $200,000 just to cover medical expenses during retirement. That estimate did not include the cost of over-the-counter medications, most dental services and, long-term care, if needed. And it did not include the charges that are currently paid by Medicare.

If we cannot depend on Medicare to be there for us, the only smart solution is to save as much money as possible. This will ensure that you can obtain the quality care you need. If you are not currently putting as much money as possible aside to pay for these expenses yourself, you are making a serious mistake.

What Is Your Solution?

As most readers already know, the very best tool for accumulating funds for future medical expenses is a Health Savings Account. An HSA is the only investment that provides a tax deduction when you deposit the money, yet never taxes the money if it is used to pay for qualified medical expenses.

Therefore, you should put as much money as possible into your HSA, and withdraw as little as possible. The contribution limit for 2007 is $2,850 for an individual, and $5,650 for families. Those over 55 can also contribute an $800 catch-up contribution. Making the maximum contribution each year will help you build a medical retirement fund that can be used to pay future medical expenses, tax-free.

Rather than withdrawing money from your account to pay for medical expenses as they occur, you should pay for medical expenses that are not covered by your health insurance, out of your own pocket. Save your receipts (for doctor visits, eye glasses, aspirin, etc), and leave your money in the account to grow tax-deferred. There is no time limit before you have to reimburse yourself, so you can make the most of this tax-free investment.

As soon as possible, you may also want to transfer some of the money into mutual funds. While some HSA administrators are paying interest rates as high as 5%, the only way you are going to really grow the account is to get a much higher return on your money. Many HSA administrators offer a discount brokerage option, so you can place your funds in virtually any stock or mutual fund.

For a family that contributes the maximum contribution each year, it is quite reasonable to assume an HSA account value well over $1 million after 25 or 30 years. Medicare may be broke, but at least you won't be.

"Medicare HSAs?"

The solution to the pending Medicare meltdown is very complicated, but it is clear that government-run medical programs don't work. The dismal results can be seen everywhere, from the former Soviet-bloc countries, to the broken down national healthcare systems of Canada and Europe. Medicare must be transformed into a program where seniors have an ownership interest in the money they are spending.

Replacing the government's obligation to provide benefits with a voucher that seniors could use to purchase health insurance from competing private insurers, and/or deposit into a "Medicare Health Savings Account," would bring market efficiencies and competition into the picture. This idea is endorsed by both the American Medical Association and the American Hospital Association.

Retirement HSAs may or may not ever come to fruition. But fortunately, HSA plans are available to those under age 65. If you do not yet have an HSA, get signed up for one now. You will lower your health insurance premiums, and can begin putting money aside for medical expenses you will almost inevitably incur during your older years.

Visit http://www.health--savings--accounts.com for more information.

Posted by Wiley Long at 03:45 PM | Comments (0)

March 27, 2007

Some State Laws are Getting in the Way of Health Savings Accounts

Some states have insurance laws that conflict with the requirements for Health Savings Accounts (HSAs) and hinder the insurers' ability to offer HSA-compatible health insurance plans. Some of these laws include mandating coverage of certain benefits below the deductible amounts specified in HSA rules and not exempting the money deposited in Health Savings Accounts from state taxes.

"We are seeing some very interesting HSA legislation this year. For example, recently, Ohio enacted a law that provides mandate-free high deductible health insurance plans for HSAs and now Rhode Island has introduced similar legislation," explained CAHI Director Dr. Merrill Matthews.

The Council for Affordable Health Insurance's updated HSA State Implementation Report reviews the state HSA environment and recent legislative action in one concise document. To learn more about current HSA state implementation issues, please go to http://www.cahi.org.

Founded in 1992, CAHI is a non-profit research and advocacy association whose mission is to develop and promote free market solutions to America's health care challenges. CAHI's membership includes health insurance companies (active in the individual, small group, HSA and senior markets), small businesses, physicians, actuaries and insurance brokers.

Get more information on Health Savings Accounts and HSA-qualifed health insurance plans at: http://www.Health--Savings--Accounts.com

Posted by Wiley Long at 09:05 AM | Comments (0)

March 11, 2007

Health Savings Accounts Help Tear Down Healthcare Walls

President Bush has introduced fairness into the tax code by giving a tax break to all Health Savings Account owners. This is a major step toward making health insurance affordable to those who want it, says Scott W. Atlas, senior fellow at Stanford University's Hoover Institution.

By making insurance prices transparent to individual buyers, health insurance can then be dissected, compared and assessed for value, an essential ingredient for unleashing the power of market forces and competition. Health Savings Accounts are leading the way in this transition.

But there is still more that can be done to extend knowledge -- the ultimate power -- to the patient, says Atlas:

- Government should demand that the prices of medical procedures be fully available and clearly presented to patients before any medical procedure.

- They should mandate that information about the qualifications of doctors be made available to their potential patients; currently doctors are not required to inform their patients whether they are board certified and deemed qualified in their field of practice.

Empowering patients with information and financial control for their health-care decisions will stimulate value-conscious choices. The alternative, widespread government mandates, often only end with negative and embarrassing consequences, says Atlas. One only needs to glance northward to Canada, with its lack of access to timely health care, to see what is so unacceptable about a centralized, government-controlled and wholly mandated health-care system.

Get your own Health Saving Account and become empowered!

http://www.health--savings--accounts.com

Posted by Wiley Long at 12:50 PM | Comments (0)

March 02, 2007

Health Savings Account Tax Considerations

Since Health Savings Accounts (HSAs) were created by the Medicare bill signed into law at the end of 2003, they are being considered by more and more Americans as a health insurance option. Anyone under age 65 who buys a qualified high-deductible health insurance policy can open an HSA.

Here is a quick overview on the important tax considerations of Health Savings Accounts:

How much can I contribute annually to an HSA?

For 2007, you can contribute up to $2,850 for individual coverage or $5,650 for families. If you’re 55 and older, you can make a catch-up contribution of $800. Legislation approved at the end of last year allows you to contribute up to these limits, even if your insurance deductible is less.

Do I fund an HSA with pre- or post-tax dollars?

If your employer offers a high-deductible health insurance policy, you may be able to make pretax contributions, like a flexible-spending account. If you open an individual HSA, your contributions will be deductible when you file your taxes, even if you don't itemize.

Are there income restrictions on the tax benefits, similar to an IRA?

Unlike a number of other tax breaks, there aren't any income limits associated with the tax-favored treatment of HSAs. Anyone under age 65 who buys a qualified high-deductible policy can benefit fully from the tax advantages of an HSA.

What's the difference between HSAs and flexible-spending accounts?

The tax benefits of both plans seem the same, but there are differences. The most important difference is that your HSA balances can roll over from year to year and continue to grow tax-free.
Legislation passed last December allows a one-time transfer of funds tax free from a flexible-spending account to an HSA. The newly revised law also allows individuals to make a one-time tax-free direct transfer of funds from an IRA to an HSA —up to the HSA’s annual contribution limit.

If my employer offers both an HSA and flex-spending account, can I have both?

Generally, no. You can’t have an HSA if you have a flexible-spending account to pay health-care costs or if you have other medical coverage, such as a spouse's policy. However, if your flex plan restricts reimbursements to wellness care, such as annual physicals, and vision and dental care, you can also have an HSA.

If I set up HSA through my current employer, can I take it with me when I switch jobs?

You can keep your HSA account money even after you leave that job, similar to a 401(k). Another benefit of HSAs is that if you are unemployed or laid off and are collecting State or Federal unemployment insurance, you can use funds from your Health Savings Account to pay for your health insurance premiums and for your routine health expenses – all tax-free.

What happens if I want to use the money in my HSA account for non-medical expenses?

You’ll incur a 10% penalty — plus an income-tax bill — if you use any of the money for non-medical expenses before you turn 65. After the age of 65, you can use the money in your HSA account for anything you please and you won't be hit with the 10% penalty, but you will have to pay income taxes on that money.

Can a couple that is planning to retire early open an HSA?

Yes. Anyone under age 65 can contribute to an HSA if he or she buys a qualified high-deductible health insurance policy, and he or she can contribute an extra $800 in 2007, if you're 55 or older. This catch-up contribution amount will increase by $100 per year until it reaches $1,000 in 2009.

Do my HSA contributions affect my IRA contributions?

No. Your HSA contributions won't affect your IRA limits — $4,000 per year or $4,500 for those over 50. It's just another tax-deferred retirement savings account.

Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 10:17 AM | Comments (0)

February 23, 2007

IRS Issues Guidance on Facilitating FSA and HRA Rollovers to Health Savings Accounts

The Internal Revenue Service has issued guidance regarding rollovers from Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (RHAs) to Health Savings Accounts (HSAs). The guidance is necessary because Health Savings Accounts are typically not available to individuals who are covered by standard FSAs and HRAs. The Tax Relief and Health Care Act of 2006 allowed rollovers from FSAs and HRAs into Health Savings Accounts. The purpose of the guidance is to allow the establishment of an HSA and the rollover of the qualified distributions for 2007 when the employee could potentially be covered by both types of plans.

The new rules provide for certain amounts in the FSA or the HRA to be rolled into a Health Savings Account. Generally, under the new rules, all of the following conditions must be satisfied in order to achieve the favorable tax treatment of the rollover:

A. By HSA plan year-end, the plan must have been amended, though the employee must have elected the rollover, and the year-end balance must have been frozen.

B. The funds must have been transferred by the employer within 2-1/2 months after the end of the plan year resulting in a “zero” balance in the FSA or the HRA.

Under the special transition relief provided in Notice 2007 - 22, available at (http://www.irs.gov/pub/irs-drop/n-07-22.pdf), the amounts remaining at the end of the year for 2006 can be rolled over without the freezing of the year-end balance in either the FSA or the HRA and the amendment, election and transfer may be completed on or before March 15, 2007.

Learn more about HSA government information.

Posted by Wiley Long at 09:38 AM | Comments (0)

January 25, 2007

President Bush's Health Savings Account Proposal

Health Savings Accounts may not be at the forefront of President Bush's proposal for health care reform this year, but he has not forgotten them.

During his State of the Union address Tuesday night, Bush outlined his plan to expand access to health insurance. The centerpiece is a standard tax deduction of $7,500 for individual policies and $15,000 for a family policy, regardless of how much the coverage cost or whether people buy it through work or on their own. Any amount over this threshold would be subject to tax.

This policy, experts say, could fuel interest in Health Savings Accounts, which Bush touted in his State of the Union address a year ago as a way to control rising health care costs and make health insurance available to more people.

HSAs are savings account, funded with pretax dollars, to pay for medical expenses. They are coupled with high-deductible health insurance policies that carry low annual premiums.

HSAs generally attract wealthier people and younger, healthier ones who don't want to shell out a lot for premiums and are willing to take the risk of paying more out-of-pocket if they get sick.

The tax deduction helps HSAs because it encourages people to keep their premiums low because they don't want to exceed the threshold and pay tax or because they want to get the maximum savings from the deduction.

"The incentive is there to purchase lower-cost coverage," said J.D. Piro, a principal at Hewitt Associates, a consulting group.

For instance, people may be more willing to buy a family policy for $8,000 annually, rather than $12,000, because they will still get a tax deduction worth $15,000, said Greg Scandlen, president of Consumers for Health Care Choices, which supports HSAs. The standard deduction removes the motivation to buy higher-cost plans.

Also, within a few years, the average annual premium will likely exceed the deduction, driving people to find lower-priced plans to avoid paying taxes on the excess cost.

Interest in HSAs, which were created in 2003, is growing. There were about 1.2 million HSA accounts in July, up 43 percent from January, according to Inside Consumer-Directed Care, a biweekly industry newsletter. The accounts held $1.5 billion in July, up 54 percent from six months earlier.

Last year, at the president's urging, Congress increased the amount that could be socked away in HSAs. In 2007, a person can contribute $2,850 if he or she has an individual policy and $5,650 for a family.

To be eligible for an HSA, a person's health insurance plan must have a deductible of at least $1,100 for an individual policy or $2,200 for a family plan.

Learn more about what a Health Savings Account can do for you at: http://www.health--savings--accounts.com

Posted by Wiley Long at 09:15 AM | Comments (2)

January 21, 2007

2006 Tax Relief Promotes Health Savings Accounts For 2007 Forward

As one of its last actions of 2006, Congress passed the Tax Relief and Health Care Act of 2006. No public policy area is more important or more in need of reform than the nation's health care system. This act makes some small but important changes that make health savings accounts easier to open and fund. Further improvements to health savings accounts will pay great dividends to all of the participants in America's health care system.

Health Savings Accounts offer lower premiums, and incentives for consumers to stay healthy and save money for future medical expenses. They also encourage more competition among healthcare providers. And as everyone knows, more competition inevitably leads to lower prices and higher quality. However, there are political opponents who say that HSAs will only be used by the healthy, wealthy, and young.

This criticism doesn’t appear to have much traction when we look at the statistics. People of all ages and wealth levels are choosing HSA plans, and there does not appear to be any separation in the group market based on health status. But to appease these critics and make HSA plans even better, we should do more to enhance personal accounts to help the sickest and those with ongoing medical conditions. Substantially higher contribution limits to cover both deductibles and out-of-pocket expenses would help those with medical conditions requiring permanent or prolonged care. HSA account balances would be more likely to grow and would offset the expected higher future expenses as these individuals age.

When people with ongoing health problems are participants in their own care, they become managers instead of just patients. HSAs will give them more incentives to pay attention to diet and to the costs of their tests and treatments, and to all their alternatives – something a hired physician just can’t do. Individuals alone should have the right to make their healthcare decisions. Instead, too many people are limited by their insurance company’s restrictions or government mandates. HSAs remove restrictions, giving people the power to control their own healthcare in a much more powerful way.

It is my hope that the new Congress will be able to work together to achieve solutions. Because HSAs offer the best solution yet to lower healthcare inflation and the cost of health insurance, both sides of congress should support efforts to expand access to these accounts, particular to those with chronic health problems.

Visit our website (http://www.health--savings--accounts.com) for more information on how a Health Savings Account can help you.

Posted by Wiley Long at 11:04 AM | Comments (0)

January 13, 2007

Health Savings Accounts and Your Taxes

Health Savings Accounts have a "triple" tax advantage from a federal tax standpoint. Individuals receive full tax advantages for their Health Savings Accounts on their Federal Income Tax return (or through a salary reduction program in certain employer-sponsored settings) regardless of particular state's tax treatment of Health Savings Accounts.

In fact, only 4 states do not allow tax deductions for Health Savings Accounts... Alabama, California, New Jersey, and Wisconsin.

An account beneficiary may take an above-the-line deduction (i.e. the amounts may be used to determine the individual’s adjusted gross income before any itemized or standard deductions are considered) for contributions made to an HSA during any month of the individual’s taxable year that the individual is eligible. The permitted deduction cannot exceed the sum of the “monthly limitations” for such months. Here are the 2007 limits:

- For those with single coverage, the maximum amount is $2,850.

- For those with family coverage, the maximum amount is $5,650.

Funds in an HSA grow on a tax-deferred basis, and distributions from an HSA are tax-free so long as the funds are used for qualified (as defined by Section 213d of the IRC) health care expenses.

How does state tax treatment of Health Savings Accounts differ from federal tax treatment?

HSAs (and the enabling legislation) are federal. As a federal program, each state decides whether to: a) comply with the federal guidelines, or; b) establish their own state guidelines regarding the tax treatment of HSAs. As a result, some income that may be tax-free at the federal level may not be tax-free at the state level.

Many states harmonize their tax treatment with the federal government. Those states include Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maryland, Missouri, Mississippi, New York, Montana, Nebraska, New Mexico, Oklahoma, North Carolina, North Dakota, Pennsylvania, South Carolina, Oregon, Rhode Island, Virginia, Utah and Vermont.

Other states, however, treat HSAs differently from the federal government, at least for tax purposes. The following states have indicated that legislation must be passed at the state level before HSAs receive a tax benefit at the state level: Alabama, California, New Jersey, and Wisconsin. New Hampshire and Tennessee do not tax income, but do tax dividends and interest.

See where all the states stand on the Health Savings Account issue: http://www.health--savings--accounts.com/state-income-tax.htm

Posted by Wiley Long at 11:24 AM | Comments (0)

December 26, 2006

Tax-free IRA Rollover Creates Health Savings Account Opportunity

The recently passed "Tax Relief and Health Care Act of 2006" has several provisions that make it easier to open and fund a Health Savings Account (HSA), including the option of a one-time tax-free rollover from an IRA into the HSA. This change has already caused a great increase in interest among the self-employed and other individuals who purchase their own health insurance.

We have been getting a tremendous number of inquiries from people who want to know how they can fund their account with money from their IRA.

HSA-qualified health insurance plans have high deductibles of $1,100 or more. By doing a tax-free rollover from their IRA, individuals can immediately fund their Health Savings Account so that the deductible can be covered 100%. That basically removes the risk of going with a high-deductible plan.

Health savings accounts are special tax-favored savings accounts that anyone with a qualified high-deductible health insurance plan can open and fund. Any money put in the account is tax deductible, and can be used tax-free to pay for future medical expenses. If the money is not withdrawn, it continues to grow tax-deferred like an IRA. HSAs first became available in January 2004, and today nearly five million people are covered by an HSA-qualified health insurance plan.

HSA plans have much lower premiums than traditional co-pay plans, but they do have a higher deductible. Medical expenses that someone incurs before they meet their deductible can be paid for from the HSA, but if they've just opened their HSA they may not have had enough time to accumulate much money in it. The tax-free IRA rollover solves that problem. I expect that by sometime in 2007 sales of HSA plans will eclipse co-pay plans as the preferred type of health insurance among individuals purchasing their own plans.

Both IRAs and HSAs are special tax-favored accounts that can be funded with tax-free money, and that grow tax-deferred. But HSAs have an additional tax advantage over IRAs: if the money is withdrawn to pay for qualified medical expenses, taxes never need to be paid on those funds. This makes HSAs a much preferred way to save for future medical expenses.

According to Fidelity Investments, the average couple retiring in 2006 will need $200,000 to cover medical expenses, not even counting dental, over-the-counter medications, or long-term care. And that amount is going up every year. Those who have an HSA could have thousands of additional dollars available to them to cover these expenses in their retirement years.

To help people who are buying their own health insurance understand these changes, HSA for America is hosting weekly teleseminars throughout the rest of 2006. If someone can get their coverage in place before December 31, they can lock in 2006 rates for the next 6 - 24 months.

Please visit http://www.health--savings--accounts.com for complete information.

Posted by Wiley Long at 10:47 AM | Comments (1)

December 10, 2006

Congress Expands Health Savings Accounts in Final Days

Congress has just given final approval to the "Tax Relief and Health Care Act of 2006" which includes provisions to expand Health Savings Accounts (HSAs).

"HSAs are still relatively new, but we are already seeing them quickly grow in popularity in the early stages of their existence," said Ways and Means Chairman Bill Thomas (R-CA). "The adjustments in this bill will make HSAs more attractive as Americans consider their health insurance options."

The newly enacted provisions would make several improvements to the already-successful HSA program. Here is a summary of the new provisions:

Expands Funding Sources for HSAs

* Allows an employee a one-time opportunity to roll over unused funds from an existing Flexible Spending Account (FSA) and/or Health Reimbursement Arrangement (HRA) to deposit in their Health Savings Account. Under this bill, employees would have the ability to start an HSA by making a one-time tax-free transfer of FSA and HRA amounts in their accounts as of September 21, 2006 to an HSA which would belong to the employee. The transfer must be made before January 1, 2012.

* Allows one-time transfers from Individual Retirement Accounts (IRAs) to Health Savings Accounts. The bill allows taxpayers to make a one-time distribution from an IRA to an HSA so HSA funds are immediately available to meet family health needs. The "roll-over" cannot exceed the HSA contribution limit for the year and is subject to the recapture taxes applicable to the part year coverage provision described below.

Expands the Annual Limits on HSA Contributions

* Repeals the annual deductible limitation on HSA contributions. The bill allows individuals with HSA-qualified health insurance plans that have deductibles below the annual contribution limits (currently $2,700 for self-only coverage and $5,450 for family coverage) to contribute up to these maximum amounts each year. Currently, contributions are limited to the policy deductible if below the annual contribution limits.

* Allows full-year contributions for part-year coverage. The bill would permit taxpayers whose HSA-qualified coverage begins mid-year to make a contribution equal to their policy deductible for the year (or the annual contribution limit, if higher (see above). This will help people who begin their HSA-qualified coverage part way through the year and who are subject to the entire calendar-year deductible by allowing them to make a full annual contribution, rather than pro-rating their contribution for the number of months of HSA-qualified coverage. Taxpayers would be required to maintain a high deductible plan for a full year beginning in the month the HSA begins or pay tax on the contribution and a 10 percent penalty.

Additional Flexibility for Employers to Help Lower Paid Workers

* Allows employers to make additional contributions for lower-paid workers. The bill provides an exception to the current "comparability rules" that require companies to make equal dollar contributions to all HSA-eligible employees with similar coverage (single or family) and work status (full-time or part-time). This provision will give employers flexibility to provide greater assistance to their lower-paid workers in the form of contributions to their HSA accounts.
Earlier Notification of Cost of Living Adjustment

* Under current law, the minimum deductible and out-of-pocket limits for HSA-qualified policies, as well as the annual contribution limits are indexed for inflation. The bill requires the Secretary of the Treasury to announce adjustments to the amounts by June 1st of each year. Currently, the adjustments are not announced until November each year. Earlier notification will simplify planning decisions for insurance companies, banks, credit unions, employers, and taxpayers.

Read all the details of The Tax Relief and Health Care Act of 2006.

Find out more about Health Savings Accounts and how to get an HSA-qualified health insurance plan at: http://www.health--savings--accounts.com

Posted by Wiley Long at 12:14 PM | Comments (0)

December 09, 2006

Health Savings Account Improvements on the Way

With The Tax Relief and Health Care Act of 2006, the Senate has approved several very positive improvements to Health Savings Accounts that would make them easier to use, more accessible, and more attractive.

The legislation already has cleared the House, and Senate approval is the final hurdle before the legislation will be sent to President Bush. The Senate is debating interminably, but passage is expected very soon.

Here are the details that provide some much needed Health Savings Account fixes and new incentives:

- The legislation would allow money from other tax-favored accounts to be rolled over into a Health Savings Account (HSA). This includes savings from your company's Health Reimbursement Arrangement, your IRA, and the health dollars in your Flexible Spending Account. (FSAs are the use-it-or-lose-it accounts that motivate people to buy prescription sunglasses in December so they don't lose the money they had set aside in their company's cafeteria plan earlier in the year.)

This is good news because people who buy HSA-qualifying insurance plans don't necessarily create the accompanying savings account. This would let them shift money from another of these savings accounts into an HSA.

- It would boost annual contributions limits for HSAs. Current law says you can't deposit more in a year than the amount of your health insurance policy's deductible. Now, as long as you have a qualifying HSA insurance policy, you could contribute the maximum amount, which would be $2,700/individual and $5,450/family this year, then $2,850/individual and $5,650/family in 2007

- The Treasury Department would be required to publish in March (instead of August) the cost-of-living adjustments for HSA contribution and deductible amounts. Employers need to know this earlier in the year so they can get their health insurance contracts and literature printed for the next benefit year.

- You also would be able to make your full annual contribution to your HSA, even if you don't set up the account right away.

- Employers would be allowed to contribute more to HSAs for their lesser-paid employees. (Many employers have said that they want to introduce the plans but can't subject their lower-wage employees to the full deductible without making a bigger deposit to an HSA than current law allows to help them with the routine expenses.)

The Tax Relief and Health Care Act of 2006 will be the major piece of health care legislation passed this year, likely in the last hour of the last day of the session.

A lot of people who believe in the promise of HSAs worked very hard to convince members of the wisdom of these fixes. Kudos to all involved!

Posted by Wiley Long at 11:58 AM | Comments (0)

December 06, 2006

Universal Healthcare vs Health Savings Accounts

Newly elected Democrats and America's Health Insurance Plans (AHIP), the industry's trade association, have put universal health care at the top of their legislative agenda, says Investor's Business Daily (IBD). Hopefully they will both reconsider Health Savings Accounts as an alternative to universal health care.

While Democrats have not developed a comprehensive universal health care plan, AHIP has outlined its formal strategy:

- The group wants the federal government to spend $300 billion over 10 years on the plan, which would expand federal-state programs -- including Medicaid -- to insure below-poverty-line children and adults.

- The organization also wants individuals to buy coverage through universal health accounts paid for with pretax dollars, with federal matching funds for working families.

But John C. Goodman, president of the National Center for Policy Analysis has his doubts:

"There is no way to make health insurance really universal in the United States. To do that would mean everybody is in the same system, and you couldn't do that unless you make it free. A free system would mean runaway costs and reduction in quality," he explains.

Goodman's solution: Personal and portable insurance, similar to health savings accounts, which are engineered like the 401(k) retirement savings program, and allow individuals to buy their insurance with tax-free dollars and take it from job to job, city to city and state to state.

Health Savings Accounts are a much better solution than a universal healthcare system. Hopefully our lawmakers will see the advantages Health Savings Accounts bring to healthcare and increase the incentives for individuals and families to get an HSA.

Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 09:04 AM | Comments (0)

November 29, 2006

Health Savings Accounts and the Problem of the Uninsured

We have experienced an increased number of uninsured patients for the past 16 years as insurance premiums have escalated and employers have been reducing and eliminating health insurance benefits as part of the employment package. In 1990, 34.4 million Americans were uninsured. At that time, 85% of the uninsured patients were members of a family with a working adult. Today, that number is 46.6 million, according to a new Census Bureau report.

Can Health Savings Accounts help reduce this number?

46.6 million represents 15.9% of our population up from 15.6% of our population in 2004 representing an increase of 1.3 million in the last 2 years. The number of workers with no health insurance rose from 26.5 million to 27.3 million. Nearly all the increase in uninsured was among working adults.

Do you think we need a creative innovative solution to ensure that all Americans have affordable and comprehensive health insurance coverage? You bet!

Congress has so far failed to reach a consensus on how to even approach the problem.

Our difficulty is we have an elected Congress that professes to support the publics’ vested interest but in reality is swayed by vested interests’ political contributions. This is the reason they are in a State of Denial about everything including medical care of our population. America does great when the crisis is overwhelming. When the crisis subsides we resort to our highly developed short attention span and ignore our problems. We leave ourselves vulnerable to be taken advantage of by stakeholders who are protecting their vested interests.

What should we be focusing on?

1. As the price of insurance has increased and out of pocket payment for the employed has increased, the price of coverage has exceeded the price the employers can afford.

2. People working and not covered by employer provided health insurance have to pay for health care premiums with after tax dollar, while their employers pay for employee health insurance with pre tax dollars.

3. Evolving tax laws and employee benefit laws are causing employers to act in ways that cause the employer to provide fewer benefits to the employee. The biggest impact is felt by moderate to low income families. They are priced out of the market. If they get sick, they figure they can get medical care paid for by their community. The result is an increase in economic pressure on the individual and the community.

In light of this the stakeholders try to protect their vested interests at the expense of the patients and society. Policy makers have proposed to force everyone to buy insurance. The goal is to force the employer to buy insurance for the employee, or force the uninsured to buy insurance or go on Medicaid. The State of Massachusetts just passed a law mandating insurance and guarantying insurance for all.

It seems all of these proposals ignore real reason people do not buy insurance on their own in the first place.

They cannot buy reasonably priced insurance on a before tax basis. The patient is disadvantaged by an expensive and defective third party payer insurance system that does not permit them to control their healthcare dollar.

A Health Saving Account system in a Price Transparent environment cures all these defects. Real insurance would be sold to individuals using after tax dollars in a freely competitive environment. The competitive environment would not be price manipulated by the insurance industry as the Medicare Part D benefit is. People would have an economic motivation to purchase insurance and keep themselves healthy. If someone had a chronic illness and if they avoided the complications of disease they could be rewarded economically.

Families on Medicaid could be motivated in the same way with the government providing the same or similar subsidies. The cost of care to State governments would be less than it is today. However, we would be empowering to the Medicaid family to make independent decisions rather than demoralizing these families in the present system of care rationing.

Americans yearn to be free and make free choices. We are not a dumb society even though our education system is crumbling. We need enlightened leadership not imprisoned by our hierarchical bureaucracy. It is going to be up to the population of 40-50 year olds to step forward and say “we are sick and tired of this and we do not want to take it anymore.”

Learn more about Health Savings Accounts at http://www.health--savings--accounts.com

Posted by Wiley Long at 08:43 AM | Comments (0)

November 27, 2006

Summit Offers Evidence to Quiet Health Savings Account Critics

Among the main criticisms of Health Savings Account Plans are they only appeal to the young, healthy and wealthy. However, a recent Washington, D.C., gathering of health and policy leaders sought to drown out Health Savings Account detractors with anecdotal and research evidence to make a strong, positive case for the current health care movement.

"Consumer Driven Healthcare is not just about benefit plan design, it's much broader than that," stressed Beth Bierbower, vice president of product design and development for Humana, at the National Consumer-Driven Healthcare Summit. "The shift is going from an HSA plan to a focus on consumerism, and it's an important one."

Point, counterpoint

One of the most important steps in that shift, summit speakers asserted, is letting go of previously held beliefs, such as Health Savings Accounts are only for the rich and young.

For example, research presented by Maureen Sullivan, a senior vice president with Blue Cross Blue Shield - which represents about 40% of the health savings account market - shows a generally even age mix of CDH participants, versus participants in non-CDHP, traditional health plans. Among workers age 25-54, enrollment in HSAs, CDHPs without an HSA and non-CDHPs all hovered between 24% to 27%.

The incomes of CDHP enrollees is more varied than believed as well, affirmed Regina Herzlinger, a professor at Harvard's business school. Herzlinger noted the recent conversions of Whole Foods and Wendy's to HSA-driven CDHPs, saying, "These are cashiers and stockers, who don't have a lot of money to spend, but have [enrolled in HSAs]."

Research from Assurant presented at the summit shows that 62% of HSA purchasers are over age 40, and 42% earned less than $50,000 per year.

BCBS also finds that health status of HSA participants tracks with those in non-CDHPs as well, Sullivan said. Thirty-six percent of HSA enrollees described their health as very good, only slightly higher than the 31% of individuals in non-CDHPs. In addition, those whose health status is described as poor have only 1% enrollment in HSAs and non-CDHPs (see Chart 2).

Lastly, perhaps CDH critics loudly contend that consumers who have enrolled in a CDH plan don't like it. Most notably, a 2005 study by the Commonwealth Fund and the Employee Benefit Research Institute found low levels of employee satisfaction with CDHPs, that employees opted to forgo medical care more often and had higher out-of-pocket costs than traditional health insurance plans.

Grace-Marie Turner, president of the Washington, D.C.-based Galen Institute, calls the study "irresponsible," pointing out the study represented a sample of only 137 individuals in "a 25-minute phone survey, which basically turned into a [complaining] session. The whole basic concept of the study is flawed." Further, BCBS found that HSA participants are more satisfied this year than last with their health coverage.

More information, more flexibility

The real issues hindering CDH progress, summit speakers said, are still largely unaddressed.

First is a lack of more detailed health cost information for consumers. Speakers advocated for more easily understood explanations of benefits - the bill that's not necessarily a bill detailing what insurance covers for certain procedures or doctor's visits - along with more transparent physician cost data, comparison tools and real-time adjudication.

"Health care is the only system where you can come in, receive services, have no idea what they cost and then leave without paying," Bierbower noted, adding that Humana Health Insurance has begun piloting real-time adjudication in two states, and issues "smart statements" to members that detail health costs in ways that are more user-friendly.

William Boyles, editor and publisher of Consumer Driven Market Report, said, "Consumers won't want to shop for health care until they are fully exposed to what that care costs. Once they have full information, they'll be more likely to comparison shop."

As Sullivan bluntly put it: "CDH can't work without transparency."

Speakers also campaigned for more flexible tax treatments for CDH account options.

"The law is rigid. With HSAs, Congress has dictated what health insurance has to look like. Tax law is shaping the health insurance you all have," said John Goodman, president and CEO of the National Center for Policy Analysis. "You can't change health care if you have to run to the Ways and Means Committee every time you try."

Finally, Greg Scandlen, president and founder of Consumers for Health Care Choices, said that in addition to more information and flexibility, consumers need a "trusted agent" in health care. "When you need help with your taxes, you hire a CPA; when you have legal issues, you hire a lawyer. They are hired by the consumer, paid by the consumer and can be fired by the consumer," he explained. "In health care, we've been thinking of the employer as the agent, which turns the whole concept on its head."

Physicians aren't necessarily the best agents, either, Scandlen said. "Often times, physicians don't know true costs, and [consumers'] convenience has never been a priority for physicians. If it were, more would have evening and weekend hours."

However, despite acknowledging the need to make bigger strides, summit speakers and attendees generally were optimistic about the future of CDH.

"The results today are encouraging," Sullivan said. "[CDH has a] wide appeal, consumers are utilizing services differently, and cost and quality data are beginning to become more integrated. The transformation has already begun. We are on our way to a much better health care system." - K.M.B.

Hire an HSA agent at http://www.health--savings--accounts.com

Posted by Wiley Long at 08:38 AM | Comments (0)

November 19, 2006

Innovative Funding of Health Savings Accounts

Paying employee bonuses directly into their Health Savings Account (HSA) can save employers money and increase the value of Health Savings Accounts.

Providing cash bonuses as HSA contributions is similar to making extra 401(k) contributions to workers based on a company's performance. The strategy favors small and mid-size organizations and will probably work best the second year of the HSA rather then the first year, says Jerry L. Ripperger, director of consumer health at the Principal Financial Group.

Deflecting the tax bite

When a company pays a worker a $1,000 bonus, it costs the employer $1,100 to $1,200 because of payroll and associated taxes. Moreover, the money is supplemental income, which is withheld at the highest marginal tax rate, so the employee will only see about $500 or $600 of the bonus. This takes away the motivational impact of the bonus, Ripperger says.

However, if an employer puts the $1,000 in a Health Savings Account, which is not subject to Federal Insurance Contribution Act, or FICA, and Federal Unemployment Tax Act (FUTA) taxes; it's treated just like a premium for tax purposes. That is, $1,000 costs the employer $1,000. The money is not imputed income to the employee if used on medical expenses, so the worker gets the full $1,000.

Ripperger, who specializes in consumer-driven health care and HSAs, admits some of his clients are using the approach implicitly rather than explicitly. That is, they are thinking about how the business is operating as they determine next year's HSA contributions. "And that's okay, but what I really want to encourage them to do is get more explicit and put some formality around it," he says.

The approach really works the cleanest with small and midsize companies because they can easily move all of their employees to a high-deductible plan with a HSA combination.

It's a little less of a prefect fit if you have 10% of your employees in a high-deductible plan with a HSA. That doesn't mean a profit-sharing model for contributing to employees' HSAs can't work; it still can, Ripperger says. It just means it will work better on a full replacement basis.

Likewise, "it's important that the employer contribution to the HSA be determined and communicated prior to open enrollment so individuals can maximize their tax-advantaged savings. Remember, employees can contribute to the HSA as well as the employer, providing additional tax savings," Ripperger observes. "We are not asking to replace any current profit-sharing plans that an employer has in place. We are merely asking them to take some of the tenets that they use and apply them to funding part of their heath care plan."

Ripperger believes by offering cash bonuses as HSA contributions, employers can start to address the magnitude of health care cost, particularly if the measure can get workers better engaged in making decisions about their health and health care.

"We can examine the health care cost by closely aligning it to organizational goals by using tools such as a profit-sharing approach," he adds.

Other funding options

Recently, the Internal Revenue Service offered more guidance on HSAs, and "now we are seeing some pretty good flexibility in offering non-comparable contributions," says Alexander C. Domaszewicz, a senior consultant at Mercer Health and Benefits in California. He agrees that some employers might see this as opportunity for a profit-sharing program based on funding HSAs on corporate performance.

Under current laws, employers are penalized with a 35% excise tax for failing to make a comparable contribution to the HSAs of its employees during a calendar year. Consequently, "we saw a little bit of a freeze on folks being too aggressive in how they interpreted the law and trying to do too much around individual performance bonus and HSAs," says Domaszewicz.

Now, policymakers have opened the door for employers to be creative with funding HSAs and cafeteria plans.

"For example, if you run your HSA contributions from the company to the employee through your Section 125 cafeteria plan, which includes being able to allow for payroll reductions, then you are able to avoid comparable contribution requirements because you are then subject to the ERISA rules and nondiscriminatory rules through your 125 plan," says Domaszewicz.

But organizations seeking to reward workers through HSAs should make sure they fully understand the laws and regulations on employer HSA contributions.

"If it's cash, then you have to put money into a HSA in a way that meets the comparable rules, and that means either the same percent of the deductible or the same dollar amount," says Scott Keyes, a health benefits consultant at Watson Wyatt in Stamford, Conn.

So, for example, "[If] I get $100 and you get $1,000 dollars, that means you have $900 dollars more in a HSA. That's going to violate the rules," Keyes point outs.

However, employers can get around those rules by permitting the employee to defer the bonus and put it into a HSA at a later time. Bear in mind, though, a worker with a $1,500 high-deductible health plan who already has $1,000 in a HSA can only put in $500 more for that year. Therefore, if you receive a $1,000 bonus, you can only put $500 in the account. - L.C.B.

Learn more about HSAs at: http://www.health--savings--accounts.com

Posted by Wiley Long at 11:00 AM | Comments (0)

November 07, 2006

Year-End Health Savings Account Tax Strategies

2007 is just around the corner, and there are several issues to consider if you currently have a Health Savings Account (HSA), or are planning on getting one in the near future.

100% of the deposit you place in your HSA is deductible on your federal income taxes. All but four states also make HSA contributions tax-deductible on state income taxes. If you are looking to reduce your 2006 tax burden and put away more money for retirement, your HSA is the first place you should put your money if you have not yet maximized your contribution.

The maximum you can contribute to your Health Savings Account in 2006 is the lesser amount of your deductible, or $2,700 for singles and $5,450 for families. Individuals who are 55 or older may contribute an additional $700. Note that contribution limits are pro-rated, based on the number of complete months during the year in which you have a qualifying HSA health insurance plan.

You have until April 15 (or later if you file for an extension. Update 8/20/2007: this information is incorrect. You cannot extend the deadline for your HSA contribution by filing an extension.) to make your 2006 contribution. If you do not fully fund your account for the current year, you cannot make a catch-up contribution for 2006 after this deadline. However, you can reimburse yourself in later years for qualified expenses incurred in 2006, even if you do not have the funds in your account to reimburse yourself at this time.

In 2007, the maximum annual HSA contribution will go up to $2,850 for individuals and $5,650 for families. Individuals 55 or older will be allowed to contribute an additional $800.

To maximize your tax benefit for 2007, it is important to have your HSA-qualified health coverage in place no later than January 1.

In order to pay for a medical expense from your HSA, it must be a qualified expense. Some of these qualified expenses include dental expenses, eyeglasses, chiropractic visits, over-the-counter medications, and sometimes even nutritional supplements.

Now is a good time to make sure you have an accurate record of your medical expenses for the year. Make sure you separate the expenses for which you have reimbursed yourself from your HSA from those that you paid for out-of-pocket. You'll want to keep receipts for all medical expenditures paid from your HSA with your 2006 tax records. Place the "non-reimbursed medical expenses" in a separate file, keeping them with the concurrent year's tax records in whatever year you decide to reimburse yourself.

The penalty for over-funding your HSA is a whopping 6%. You have until April 15, 2007 to withdraw excess funds for the 2006 tax year to avoid the penalty. Your HSA administrator may notify you of any over-funding, but they are under no obligation to do so. It is your responsibility, so make sure you check into this if you think your may have over-funded you account.

The minimum deductible for HSA-compatible health insurance plans in 2006 was $1,050 for individuals and $2,100 for families. In 2007 this will increase to $1,100 for individuals and $2,200 for families. If you currently have an HSA-qualified plan with the lowest eligible 2006 deductible, that deductible will automatically go up on January 1 to the new minimum.

Strategies to Maximize Your Tax Benefits

There are basically three different strategies you can take when deciding how to fund your health savings account.

1. Put no money in the account, except when you incur a medical expense. This strategy allows you to legally "launder" any money used to pay medical expenses. In other words, by depositing money into your HSA, then immediately withdrawing it to reimburse yourself for medical expenses, you are making your medical expenses all tax-deductible. You may want to use this strategy if you are on a tight budget and want to keep your cash outlay as low as possible.

2. Fully fund the account, or at least put in as much as possible based on your budget. Take money out of the account any time medical expenses are incurred, and let the rest grow tax-deferred. This strategy will maximize your tax deduction, while making your HSA funds available to pay any non-covered medical expenses before your deductible is met.

3. Fully fund the account, but pay all medical expenses from a non-HSA account. Reimburse yourself for medical expenses at a later date. This strategy will allow you to maximize your tax deduction, and will also allow you to maximize the tax-deferred growth of your HSA. You can then reimburse yourself, tax-free, at any time in the future for medical expenses incurred over the ensuing years.

To maximize the potential growth of your funds, you may want to make your 2007 deposits as early in the year as possible. Any growth in your account is tax-deferred, like an IRA. If possible, you should plan to make your deposit the first week in January.

Posted by Wiley Long at 09:18 AM | Comments (21)

November 01, 2006

Health Savings Accounts for Medicare

Medicare officials say it is time to modernize the health plan by providing American seniors with more information and choice when it comes to their healthcare.

According to the National Center for Policy Analysis, beginning in 2007, Medicare will launch plans with features similar to Health Savings Accounts (HSAs):

- Under the plan, Medicare pays for high-deductible insurance coverage and puts money in an account for the Medicare recipient.

- The money and its earnings accumulate tax-free as long as they're used to buy health care.

- If the money in the account isn't used, it can roll over to the following year.

- Medicare recipients would pay more of their initial costs out-of-pocket, but unlike traditional Medicare there would be a cap on their total spending for the year.

- Medicare said the program would be good for people who already had an HSA in the private market and are familiar with the concept, and those who want more control over health spending or who need protection from catastrophic health expenses.

In many ways, the new Medicare initiatives reflect a shift within the private insurance market to more "consumer-driven" health care. In essence, patients pay part of their health care costs so they have more incentive to stay healthy and choose cost-effective care when they're sick.

John Goodman, president of the National Center for Policy Analysis, says there's a chance the introduction of HSAs will skew premiums, but changing Medicare is worth the risk.

"What we have now is a very wasteful system," Goodman said.

Learn more about Health Savings Accounts and what they can do for you at: http://www.health--savings--accounts.com

Posted by Wiley Long at 07:47 AM | Comments (0)

September 18, 2006

Final Inflation Adjusted Health Savings Account Numbers for 2007

With the release of the August 2006 inflation figures, the inflation-adjusted amounts for Health Savings Accounts (HSAs) for 2007 are now known, says Roy Ramthun, Senior Vice President of HSA Clearing Corp. "We now know all the data points to calculate 2007 numbers for HSAs. The maximum HSA contribution (not including catch-up contributions) will be $2,850 for self-only coverage and $5,650 for family coverage in 2007." The annual catch-up contribution for individuals age 55 or older is set by statute and will be $800 per person for 2007.

Ramthun says that for insurance plans offering HSA qualified health savings plans, "The minimum deductible for HSA-qualified high deductible health plans (HDHPs) will be $1,100 for self-only coverage and $2,200 for family coverage policies. The out-of-pocket maximums in 2007 will be $5,500 for self-only policies and $11,000 for family coverage policies.

Now that these figures are known, companies can begin to finalize their 2007 plans, even though the official inflation adjusted amounts for HSAs will not be published by the IRS until later this fall, says Ramthun.

Find out more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 09:03 AM | Comments (2)

September 06, 2006

Doyle Obstructs WI Health Savings Account Reforms

WI Gov. Jim Doyle recently vetoed legislation on Health Savings Accounts (HSAs) for the third time. This legislation would have matched the federal tax deduction for HSAs. These accounts are unique in the fact that they consist of contributions used for minor medical expenses, allowing participants to spend less money on high-deductible catastrophic coverage. With this third veto by Doyle, it should be noted that Wisconsin is one of only four states that have not as yet approved HSA legislation.

Viewpoint
Special Report: Insurance & Employee Benefits
By Dean M. Hoffman

I am an employee benefit consultant and an active member of both the National Association of Health Underwriters (NAHU) and the Wisconsin Association of Health Underwriters (WAHU).

It has been said by many here in Wisconsin, but I am going to say it again: Wisconsin cannot afford to allow another term for Gov. Jim Doyle. He is against what is best for Wisconsinites, who struggle every day to keep up with their skyrocketing health care costs. This will continue the pain of employers trying to do business here in Wisconsin.

The governor tried to justify his actions with the argument that HSAs are only for the “healthy and wealthy.” This statement is simply not true. A study released by America’s Health Insurance Plans, eHealthInsurance and Assurant Health, shows that 27 percent of HSA purchasers have a net worth of less than $25,000. In addition, it was recently reported that nationally, one third of those who have enrolled in HSAs were previously uninsured.

The governor further defended his veto position by stating, “HSAs are inextricably linked to high-deductible medical insurance and therefore could decrease employer-sponsored insurance coverage.”

No study has shown tax-free HSAs lead to employers dropping health insurance coverage. In fact, anecdotal evidence supports the opposite conclusion. It is true that HSAs are linked to high-deductible insurance; but those plans are less expensive than low-deductible plans, making it easier for employers to continue providing coverage.

Not only are HSAs helping more Americans afford health insurance, they also are addressing the issue of rising health care costs. HSAs give consumers a reason to be value-conscious shoppers in the health care marketplace. When individuals pay more attention to the cost of health care and demand value for their dollars, they become better consumers and thus total health care spending will decline.

I believe a better system can be realized when Wisconsinites have choice and control over their health care decisions – with patients working alongside doctors to make those decisions. The best way to do this is through choice and competition, which can work in the health care arena as they have in most sectors of our economy by encouraging innovation, transparency and stimulating new ideas for controlling costs and delivering care in a more effective way.

Dean M. Hoffman is the director of large group services at Diversified Insurance Services Inc. in Waukesha and has been in the employee benefit industry for more than 30 years. He is a past president of the Wisconsin Association of Health Underwriters and the current membership chair for Region 4 of the National Association of Health Underwriters. NAHU/WAHU is an association of highly qualified health insurance professionals with 22,000 members in the United States and more than 560 members in Wisconsin.

Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 11:12 AM | Comments (0)

September 04, 2006

Free Health Care is a Fatal Notion

Although national health care may be the Holy Grail of American liberalism, Amy Ridenour of the National Center for Public Policy Research sees this model more as a poisoned chalice.

A better option would be for our government to adopted liability reform, interstate medical insurance sales, unhindered health savings accounts and other pro-market improvements.

It would be bad enough if a national health care system merely offered patients low-quality treatment. Even worse, Ridenour finds, it kills them:

- Breast cancer is fatal to 25 percent of its American victims; in Great Britain and New Zealand, both socialized-medicine havens, breast cancer kills 46 percent of women it strikes.

- Prostate cancer proves fatal to 19 percent of its American sufferers; in single-payer Canada, this ailment kills 25 percent of such men and eradicates 57 percent of their British counterparts.

- After major surgery, a 2003 British study found, 2.5 percent of American patients died in the hospital versus nearly 10 percent of similar Britons; seriously ill U.S. hospital patients die at one-seventh the pace of those in the United Kingdom.

In addition, medicrats often distribute resources based on politics rather than science, leaving a disorganized and inefficient system for many patients, says Ridenour:

- In usual circumstances, people over age 75 should not be accepted for treatment of end-state renal failure, according to New Zealand's official guidelines, unfortunately government controls kidney dialysis.

- According to a Populus survey, 98 percent of Britons want to reduce the time between diagnosis and treatment.

For all its problems, says Ridenour, the United States' more market-friendly health system offers patients better care and would deliver greater advancements if government adopted liability reform, interstate medical insurance sales, unhindered health savings accounts and other pro-market improvements.

Posted by Wiley Long at 03:35 PM | Comments (0)

August 21, 2006

No Health Savings Accounts in Canada

Canadians have to suffer tremendous waits for health care services due to their single-payer healthcare system. Fortunately, Health Savings Accounts will save the U.S. from the same fate. First hand experience of Canada's single-payer system shows why we need to depend more on Health Savings Account plans.

Last week I was vacationing in Banff, Canada, and saw this letter to the editor in the Calgary newspaper:

Re: “woman miscarries in ER”, July 25.

Hospital wait times have become ridiculous. Two weeks ago, my grandpa was taken to Foothills via ambulance complaining of extreme stomach pain and we had to wait 12 hours to see a doctor. This is insane.

Insane – yes, but unexpected – no. Anytime a single-payer system is tried, and competition no longer exists, prices go up, quantity and quality go down. Canada’s single-payer healthcare system has resulted in routinely long waits – sometimes even weeks or months – to receive medical care. A much smarter system is to let doctors and hospitals compete for the consumer’s business, just as happens in every other business.

Because Health Savings Accounts put buying decisions in the consumer’s hands, the natural result will be greater competition by healthcare providers for the consumer’s dollars. The growing use of HSAs should ensure that Americans never have to suffer from the poor healthcare system that has developed in Canada. Let’s hope so.

Learn more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 10:30 AM | Comments (0)

August 09, 2006

U.S. Treasury Issues Final Health Savings Account (HSA) Comparability Rules

The Treasury and IRS just issued final regulations of Health Savings Account (HSA) comparability rules that will give employers more flexibility in designing HSA style health plans. The final regulations state that when an employer makes a contribution to employee's Health Savings Account, they must contribute a comparable amount to all employees who are eligible.

Jim Snyder, President of Great Lakes HSA and one of the leading authorities on HSA regulations, said “the final regs are a clear sign the Treasury is trying to make it easier for employers to adopt an HSA style health plan by giving them added flexibility when designing a HSA health program. This flexibility will translate into additional options for employees and higher enrollment rates for HSA plans in 2007.”

Jim highlighted some of the new features of the final regulations below:

• Collectively bargained employees receive an exception from the comparability regulations.
• The ability to make different comparable contributions based on different variations of family coverage.
• Eligible employees now have a right to elect to receive cash in lieu of all or a portion of an employer HSA
contribution,
• Employer contributions to the employee's HSA made through a cafeteria plan are excluded from the
comparability rules.
• An excise tax on an employer if it fails to make comparable contributions to employees' HSAs.

One of the most important aspects of the final regulations is the Treasury’s effort to clarify other HSA comparability issues through numerous examples that illustrate the application of the rules. “This is the first time I can remember when the Treasury issued final regulations that didn’t make the original regulations more complicated to understand and manage at the employer level. Once HR professionals digest the final HSA regs, I they will begin 2007 with a positive outlook on the future of HSA plans within their organization.

Jim also mentioned that employers who currently have a HSA plan in place and vary employer contributions by location, categories of coverage or employee group, should review their plan design to insure it meets the final comparability regulations. The regulations will apply to employer contributions made on or after January 1, 2007.

Learn more about Health Savings Accounts.

Posted by Wiley Long at 09:31 AM | Comments (0)

July 31, 2006

New HSA bill could surpass guaranteed issue requirement

Rep. Mike Rogers (R-Mich), has introduced H.R. 5475, the Health Savings Account (HSA) Accessibility and Portability Act. The bill would require insurance carriers to make the high-deductible health plans that accompany Health Savings Accounts portable, as well as cap the rates of individual policies. As a result, insurance companies would avoid guaranteed issue requirements.

"With health savings accounts becoming more and more popular with employees in small businesses, and the accounts being portable from one job to another, we need to provide the same portability for the high-deductible policies that give them backup for their HSAs in the event of major health problems," Rogers said in a statement.

The bill could further fuel business interest in HSAs and at the same time give insurance carriers relief from guaranteed issue requirements for small groups. Rogers says his bill will make insurance more affordable for small businesses because, as some experts say, the guaranteed issue requirements add about 25% to the cost of coverage.

Posted by Wiley Long at 11:01 AM | Comments (2)

July 24, 2006

Health Savings Accounts put consumers in control

The cost of health insurance for the average family has tripled over the past two decades. Rising healthcare costs are eating into gains in wages for American workers.

Over the years, individuals and families have lost sight of how their healthcare dollars are actually spent. Health savings accounts (HSAs), however, are changing all that and revolutionizing our healthcare system. HSAs are giving individuals and families control over their healthcare dollars, which is injecting more consumerism and choice into the healthcare marketplace.

HSAs are helping patients and doctors communicate more directly and are causing health insurers to compete better for Americans’ healthcare dollars. HSAs not only give people more control over their health and healthcare dollars but they also provide individuals and families with an affordable healthcare option.

Since the inception of HSAs two years ago, one-third of those who have purchased HSA-compatible insurance were formerly uninsured. Thirty-three percent of HSA-compatible health plans sold are now offered by small businesses that previously did not offer health coverage. In the past two years, over 3 million Americans have discovered that HSA-compatible insurance is the best and most affordable option for the healthcare coverage they need.

Congress must take action to make HSAs an even more affordable, accessible, and consumer-friendly healthcare option. First, individuals and families should be put on an equal footing with employers when purchasing coverage.

Currently, employers use pre-tax dollars to purchase healthcare coverage. In the same way, individuals should be allowed a tax deduction for premiums paid on health insurance.

Moreover, to provide further incentives to individuals and families, Congress should provide a payroll tax credit equal to that enjoyed by employers purchasing healthcare coverage for their employees. By taking away these tax inequities, we can put everyone on the same playing field and expand access to affordable healthcare for all Americans.

Congress should also increase the contribution limit on HSAs so that more savings can build up over the long term for future medical needs. We support doubling the amount individuals and families can contribute to an HSA — up to $5,250 for individuals and $10,500 for families. That way, as money builds up tax-free, individuals and families will realize more savings and will have an incentive to be even smarter consumers in the healthcare market.

Health savings accounts put Americans back in control of their healthcare dollars and empower the doctor-patient relationship. These accounts create incentives for Americans to save for their future healthcare needs and invite consumerism and competition back into the healthcare market.

More market transparency and more competition mean lower prices for healthcare. Lower costs mean more healthcare for more Americans. Congress should use the opportunity it has in July to expand and liberalize HSAs.

Learn more about HSAs at http://www.health--savings--accounts.com

Posted by Wiley Long at 09:01 AM | Comments (0)

July 20, 2006

Health Care Choice Act Would Create Competitive Marketplace

The Health Care Choice Act would increase access to individual health coverage by allowing insurers licensed to sell policies in one state to sell policies in any other state. Why is this important? Under the current system, many localities have only one insurance product available, so the consumer is forced to buy an overpriced product, or forgo insurance altogether. The state markets are simply not competitive, says Devon M. Herrick, a senior fellow at the National Center for Policy Analysis.

Because both regulations and mandates are made on a state-by-state basis, the cost of insurance varies widely. For example, California is a large state with a fairly competitive insurance market.

-- A 25-year-old male from Northern California perusing the Web site of the nation's largest independent Health Savings Account agent (HSA for America) can choose from over 84 different plans.

-- These plans range in price from $468 per year ($4,000 deductible, no co-insurance) to $2,952 per year (HMO with $0 deductible, no co-insurance and $25 office visits).

Unfortunately, not every state is so lucky:

-- A 25-year-old male living in Kentucky could get an individual insurance policy for $960 per year.

-- That same male, were he a resident of New Jersey, could expect to pay $5,880 per year for similar coverage.

-- Kansas would price the policy at $1,548, and New York state would rate it at $5,172.

The Health Care Choice Act would allow consumers to shop for individual insurance on the Internet, over the telephone or through a local agent. Residents of any state would be free to choose among policies from any insurer that offers them. The policies would be regulated by the insurer's home state. Consumers would be more likely to find a policy that fits their budget -- giving more people access to affordable insurance, says Herrick.

http://www.health--savings--accounts.com

Posted by Wiley Long at 12:12 PM | Comments (0)

July 14, 2006

CO Insurance Commissioner Puts Faith in Health Savings Accounts

"Entrepreneurs in America have always responded to demand," Colorado Insurance Commissioner Dave Rivera told a recent audience of health insurance brokers.

Since Rivera is in charge of consumer protection, he believes that the market, not government, will solve the nation's health care crisis.

Instead of over regulating insurers, he trusts letting Health Savings Accounts flourish and, in turn, disclosing risk and rewards to consumers.

Not surprisingly, he's a fan of high-deductible health plans and mandate-light insurance policies that give consumers greater flexibility to shop for the benefits and services they want.

Rivera talked with the Rocky Mountain News about what he's been up to in the past 15 months.

What have you spent most of the past year working on?

Big picture, I've been really focused on this movement in many aspects of insurance in moving from a paternalistic system where the employer or government makes a lot of decisions to a system where consumers have a lot more decision-making power.

What are the potential downsides of this movement?

Anytime you give consumers the ability to make a decision that's best for their individual circumstances, that's preferable to having government make that decision for them. But you always run the risk of a consumer making the wrong decision.

And as people become busier and have less time on their hands, it is a challenge to manage all this information. That's why one of our focuses has been on meaningful disclosure. The trick is making sure consumers have information but that it is meaningful and not too much so they don't understand it or won't use it.

Give us an update on title insurance.

It's been a big project that's ongoing. But it fits into something I feel strongly about: You can have a lot of competition and choice, but if you don't have a level playing field, the consumer doesn't benefit.

We believe title insurers set up shell reinsurance companies to provide kickbacks to the referring home builders and lenders. If the title insurer was able to divert a portion of the premiums, aren't these premiums overpriced?

Have you made enemies in the title insurance industry?

I wouldn't say we've made enemies. Our goal again is to help create a level playing field. The companies that were playing by the rules are happy that we're taking these actions.

You've said that health savings accounts are one part of a 10- or 12-step recovery plan for the health care system. What are the other parts?

A good tort environment that discourages frivolous lawsuits will keep down costs and make sure that doctors can afford to practice here and want to practice in Colorado.

You've also said that overuse of health care is the main contributor to rising premiums.

We clearly have perverse incentives, or no financial incentives, to make the right decision in health care. We have little financial incentive to shop around, or little financial incentive to pick up the phone and say, "Do I really need to come in to the doctor now?"

When our family had $15, $20 copays in the old system, if it was a minor cold, we'd just go to the doctor. Now we have an HSA, and at least we ask the question, do we really need to?

How are HSAs going to make a huge dent in costs when they are based on a false premise: namely that unnecessary doctor visits and procedures are the source of sky-high health costs?

If you look at HSAs, they are paired with high-deductible health plans, so you're talking about a $1,050 deductible for someone with a chronic illness, but it's a 30 percent to 40 percent reduction in premiums.

There might be a lot of people who would have had no health insurance at all to take care of those chronic illnesses and who now have access to affordable health insurance.

Tell me some other ideas on your 10-point list.

Health information technology: moving us out of the 19th century, by implementing electronic medical records that preserve privacy and give doctors the information they need so they are not duplicating care.

Who is going to pay for those records?

That's going to be one of the challenges, and government may have to play a role - either through grant funding or financial incentives.

Taxpayers?

Yes, if you are looking at government playing a role.

Find out more about Health Savings Accounts at: http://www.health--savings--accounts.com

Posted by Wiley Long at 10:05 AM | Comments (0)

July 12, 2006

Can Health Savings Accounts Help Veterans?

The chairman of the Senate Veterans' Affairs Committee Sen. Larry Craig, R-Idaho., wants to create pre-tax Health Savings Accounts for military veterans to help them pay for their own health care. He said health savings accounts, already widely used in the private sector, could be easily provided to veterans.

"With an HSA, individuals or companies can contribute to an account on a pre-tax basis," Craig said in a statement. However, under the current law, veterans enrolled in the Department of Veterans Affairs health care system are prohibited from using an HSA.

"Those funds can then be withdrawn by individuals to pay for qualified health care expenses. When coupled with a high-deductible, low-premium health insurance policy, HSAs allow people to provide for their own health care needs and do so tax free."

Craig’s committee would not have jurisdiction over the legislation he plans to introduce. Because it changes tax law, the bill would be referred to the Senate Finance Committee, which could have difficulty acting on it.

Tax legislation must originate in the U.S. House of Representatives, where there is no similar proposal at the moment. However, if the House were to send the Senate a tax bill, even one unrelated to veterans or health savings accounts, the Senate could attach Craig’s proposal if he can gain enough support.

Under current law, veterans enrolled in the Department of Veterans Affairs health care system are prohibited from using a health savings account. “That’s crazy,” Craig said. “That means a service-connected veteran, using the system the government established to care for his or her injuries now, must surrender a tax advantage. That’s not right.”

Because of how the law is written, it isn’t just a veteran who is denied the tax advantage but also the veteran’s family, Craig said. That’s because the law can be interpreted as prohibiting a veteran enrolled with the VA for health care from having any pre-tax health savings account, whether for the veteran or his or her family.

“With limited exception, VA is not a family health care provider,” Craig said. “That could mean that a veteran who uses the VA health care system may be cheating himself out of contributions to an HSA that could cover his entire family for care that VA will not provide to them.”

Craig said the prohibition doesn’t seem to serve any purpose. “Veterans are just being treated differently under the law, and cannot enjoy a tax break others enjoy.”

Learn more about Health Savings Accounts at http://www.health--savings--accounts.com/

Posted by Wiley Long at 02:18 PM | Comments (0)

July 05, 2006

House Hearing Reveals Health Savings Accounts are Working

At a House hearing before the Ways and Means Committe, witnesses say Health Savings Accounts are a good idea and seem to be working, but they could use a little tweaking to become more widespread.

Business leaders and insurance representatives said Health Savings Accounts should be tweaked to allow employers to contribute more for chronically ill workers and permit workers to have accounts larger than the deductible of their high-deductible accompanying HSA insurance plan. They also called for more transparency so that their employees have access to the information they need to make healthcare decisions.

"The health and wellness of our employees and their families now and in the future will improve as they take more ownership of their health care decisions," said Jeff Cava, executive vice president of restaurant chain Wendy's International, which switched all of its employees to HSAs three years ago.

Since the switch, the 84 percent employee participation rate in company insurance has remained stable, while in the first year the company's healthcare claims decreased by 14 percent, Cava testified.

To ensure the long-term health of employees is protected, the company has tacked on extras -- like full coverage for preventive care and extra contributions for drug costs.

Karen Ignagni, president and CEO of America's Health Insurance Plans, in her testimony suggested making HSAs more compatible with Flexible Spending Arrangements, and enacting a tax credit to help low-income individuals purchase HSA-compatible insurance.

Opponents of HSA expansion argued they discourage employees from preventive care, are not a viable option for the poor, and may further fragment insurance markets.

"Placing greater financial burdens on the sickest and poorest patients is not the right prescription for what ails the health care system," said Sarah Collins, assistant vice president of health insurance research at the Commonwealth Fund.

The Health Savings Account debate is likely to continue for some time. Here's a great article entitled "The Health Savings Account Debate" which goes into more detail.

Find more information online at http://www.health--savings--accounts.com

Posted by Wiley Long at 08:09 AM | Comments (0)

June 26, 2006

Hearing on Health Savings Accounts by Ways and Means Committee

Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways and Means, announced the Committee will hold a hearing on Health Savings Accounts (HSAs) on Wednesday, June 28, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:30 a.m.

Oral testimony at this hearing will be from invited witnesses only because of time constraints. Witnesses will include experts on health insurance issues, health savings accounts and members of the business community. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.

FOCUS OF THE HEARING:

In continuing the Committee's consideration of health care financing, the hearing will focus on real world examples of people and businesses with experience using or providing Health Savings Accounts. This real world experience will provide valuable insight in the Committee's future consideration of HSA adjustments. The panel witnesses will describe the key components of HSAs and HSA-eligible health insurance plans. Also, the witnesses will provide information on key demographic trends in HSA use, insurance premium costs and affordability, and health insurance benefit levels. Finally, witnesses will provide testimony regarding the impact of HSAs on consumers and business.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select “109th Congress” from the menu entitled, “Hearing Archives” (http://waysandmeans.house.gov/Hearings.asp?congress=17). Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.” Once you have followed the online instructions, completing all informational forms and clicking “submit” on the final page, an email will be sent to the address which you supply confirming your interest in providing a submission for the record. You MUST REPLY to the email and ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by close of business Wednesday, July 12, 2006. Finally, please note thatdue to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225‑1721.

FORMATTING REQUIREMENTS:

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All submissions and supplementary materials must be provided in Word or WordPerfect format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. All submissions must include a list of all clients, persons, and/or organizations on whose behalf the witness appears. A supplemental sheet must accompany each submission listing the name, company, address, telephone and fax numbers of each witness.

Note: All Committee advisories and news releases are available on the World Wide Web at http://waysandmeans.house.gov.

To learn more about Health Savings Accounts, visit us at: http://www.health--savings--accounts.com

Posted by Wiley Long at 08:34 AM | Comments (0)

June 22, 2006

House should consider Health Savings Account improvements

Last month, the United States Senate scheduled a "Health Week" to consider modest changes to the health care system. It failed to pass anything. The House of Representatives can do better. It can make serious progress in health care reform by considering legislation that would meaningfully change the health care system to improve access and affordability.

The House of Representatives should consider policies that promote personal control over health care dollars, expand consumer choice and competition, and reduce the regulation of health care. A key aspect will be to make improvements to Health Savings Accounts.

A key objective of Health Savings Accounts is the promotion of direct payment of health care dollars, without a tax penalty, to doctors and other medical professionals. This aspect of HSAs levels the playing field in the marketplace between traditional health insurance and these new tax-free payment arrangements. Ideally, Congress should separate the savings component of HSA arrangements from the federally designed high-deductible health plan requirement. This concept is supported by several free-market think tanks, including the National Center for Policy Analysis (NCPA) and the Cato Institute. This change would encourage individuals to save for their health care expenses and give them full control over how best to use those savings, whether for premiums, deductibles, or other cost-sharing requirements.

At the very least, the House of Representatives should make technical improvements to the design of HSAs. First, individuals who buy their own HSA policy should be allowed to use the HSA to pay premiums, which they cannot do today. To this end, Representative Sam Johnson (R-TX) has introduced the "HSA Premium Affordability Act" (H.R. 5586) to allow individuals to use their HSAs to purchase non-group coverage under a high-deductible health plan. Second, the contribution levels for HSAs should be increased to match total out-of-pocket expenses, not just the deductible. Finally, changes should be made to better coordinate HSAs with other health accounts, such as Health Reimbursement Arrangements (HRAs) and Flexible Spending Accounts (FSAs). For example, individuals and families should be able to transfer funds from these accounts into their HSAs or, in the case of an FSA, to take the balance as taxable income. To these ends, Representative Eric Cantor (R-VA) has introduced the “Tax Free Health Savings Act” (H.R. 5262), a comprehensive HSA proposal that reflects several of these recommendations.

Let's hope the House of Representatives will do a better job than the Senate at promoting Health Savings Accounts. Learn more about HSAs at: http://www.health--savings--accounts.com

Posted by Wiley Long at 09:23 AM | Comments (0)

June 13, 2006

Feds To Help HSA Shoppers Find Bargains

To help Americans become smarter health care shoppers, Medicare will publish a range of what it pays for 30 common procedures and report how frequently hospitals perform them, federal officials say.

The release of the information fits with the Bush administration's strategy of moving more people into health savings accounts and high-deductible insurance policies. Such insurance policies require people to bear more of their initial medical expenses.

As more people buy HSA plans, the administration maintains, cost increases would slow because people would work harder to look for the best deal or decide they don't really need a medical service after all.

The new Medicare data released covers such procedures as heart operations, the implant of heart defibrillators and back and neck operations.

The most common elective surgery paid for by Medicare is the replacement of a hip or knee. The government information shows that those procedures cost an average of $11,761. Medicare paid between $9,992-$12,173, on average.

The government broke the numbers down to the county level. In Baldwin County, Ala., for instance, three hospitals provided 373 operations for knee or hip replacement, and Medicare paid those hospitals a range of $8,859 to $8,936.

The government also noted how many hip or knee replacements each Baldwin County hospital performed. One hospital in the county performed 11, another 66, and still another, 296. Officials say the frequency of a particular procedure can be an indication of quality, with more being better.

"There is a large variation in how much you pay for services if you go to different doctors or hospitals or providers," said Mark McClellan, administrator for the Centers for Medicare and Medicaid Services. "There's also significant variation in the quality of care you can get, so this is important information for anyone to pay attention to."

Tom Nickels, senior vice president of government relations for the American Hospital Association, said the information had value but was limited in its usefulness. People don't need to know what Medicare pays for an operation as much as they need to know the details of their own insurance policy, he said.

"It's worth looking at, but it doesn't supplant the need to know what your co-insurance obligation is," Nickels said.

Mike Leavitt, secretary of the Department of Health and Human Services, said the government was taking the initiative when it comes to transparency. But the goal is for the private sector to follow, he said.

"The federal government is the biggest single purchaser of health care in America, and by taking steps to post prices and quality data, we hope to encourage more insurance companies, hospitals, clinics and doctors to do the same," Leavitt said.

Trade groups representing businesses said the release of the data was an important first step in empowering consumers.

"Unfortunately, today's consumer is completely unaware of the cost of their health care until they receive a bill in the mail," said the Business Roundtable, an association of chief executive officers. "By making cost information available, consumers will be better informed on pricing, and better able to make educated health care decisions.

The data about the cost of a particular service should be especially useful for the uninsured as they seek steeper discounts, Leavitt noted, because they don't have someone negotiating cheaper rates on their behalf. They can be charged three times as much as what the government or a private insurance company pays, he said.

Find out more about Health Savings Accounts.

Posted by Wiley Long at 09:34 AM | Comments (1)

June 09, 2006

White House Pushes for Health Savings Account Blue Cross Plan

Blue Cross Blue Shield, which has many enrollees in the federal employee health program, would like to add a health savings account option for government workers and retirees under legislation proposed by the Bush administration.

The Office of Personnel Management, which administers the Federal Employees Health Benefits Program, recently sent a draft bill to Congress that would modify a law that limits Blue Cross to two plans. OPM officials said they would use their regulatory powers to steer Blue Cross into sponsoring a high-deductible plan featuring a health savings account.

The proposal is drawing opposition from the National Active and Retired Federal Employees Association, which contends that high-deductible plans with health savings accounts tend to siphon younger and wealthier enrollees from traditional plans and make it more difficult for traditional plans to hold down premium increases.

Jackie Fishman, a spokeswoman for Blue Cross Blue Shield, said, "We are watching to see what Congress is going to do and what they will allow us to do." She noted that Blue Cross adjusts its benefit packages "based on sound actuarial information and the value we offer our customers."

The White House has championed high-deductible plans that offer health savings accounts, or HSAs, as a way for consumers to take more control of their spending for medical care. With an HSA, an enrollee makes a tax-deductible contribution to a savings account. The account is used for routine medical costs, tax-free, and the high-deductible plan covers serious illness or injury.

HSAs are available to people who are not enrolled in Medicare and do not have other insurance. Since Treasury Department rules typically exclude retirees, the OPM is offering federal retirees a similar account, called a "health reimbursement arrangement."

The president's fiscal 2007 budget proposed the statutory change so that Blue Cross could offer a third plan to federal employees and retirees. The company offers a fee-for-service standard option and a basic option that requires enrollees to stay in the Blue Cross network.

If approved, the legislation would permit the OPM to follow through on efforts to add high-deductible and consumer-driven plans to the federal employee program. In December 2004, the OPM changed its regulations to foster such plans by allowing companies other than Blue Cross to offer more than two options.

In a letter to congressional leaders, the OPM said the administration estimated that allowing Blue Cross to add a high-deductible plan would save $1.1 billion over five years and $3.4 billion over 10 years in program costs.

Those projected budget savings have drawn some skepticism on Capitol Hill because they assume that large numbers of federal employees will transfer to a Blue Cross high-deductible plan to take advantage of slightly lower premiums or the ability to build up savings for medical expenses in a tax-deferred account.

Nancy H. Kichak , an associate director at the OPM, said the estimated savings were based on Blue Cross's success in drawing enrollees to its basic option, which was introduced in 2002. She noted that Blue Cross's brand name would help the company market HSAs to federal employees and retirees.

Blue Cross has been a popular choice for many federal employees and retirees over the years. It covers about 60 percent of the enrollees and families in the Federal Employees Health Benefits Program. The standard plan has 2.1 million enrollees, and the basic option has about 261,000 enrollees. Four years ago, basic had 87,000 enrollees.

Visit http://www.health--savings--accounts.com for more information on HSAs and to compare Blue Cross Blue Shield plans.

Posted by Wiley Long at 10:38 AM | Comments (1)

June 07, 2006

Libertarian party supports Health Savings Accounts

The U.S. needs to find a solution to the health care crisis, but more government is not the answer, says Patrick Wilbur, the Libertarian candidate running for Kansas state insurance commissioner.

Wilbur says the current insurance commissioner, Sandy Praeger, has promoted health savings accounts as a way to help people manage their health insurance costs, and he will continue encouraging people to start HSAs if he is elected.

“Eventually, I’d like to see government entirely out of the health insurance business, but this is a great first step,” he said.

Wilbur says he would also support tax credits for people who start health savings accounts.

HSAs, which must be tied to a high-deductible medical insurance policy, allow people to earmark money for major medical expenses in the same way that holders of individual retirement accounts save money for retirement. HSAs have been legal in Kansas for about two years.

Wilbur believes that a free-market strategy, in which businesses and people take responsibility for their financial affairs and accept the consequences of their decisions, is the best way to solve the state’s health care crisis, according to a Nov. 21, 2005, news release announcing his campaign. He contends that giving state and federal government increased control of the medical and insurance industries will cause a steep increase in administrative costs.

Generally speaking, libertarians support a free-market economy, civil liberties, and personal freedom and responsibility.

Wilbur is the vice chairman of the Kansas Libertarian Party and a project director for the Lawrence office of Pearson Government Solutions, a company that designs, builds and operates governmental systems and services. Two years ago, he ran for the 45th District seat in the Kansas House but lost to Republican Rep. Tom Sloan.

Wilbur said he decided to seek the insurance commissioner’s office in part because he believes the health care crisis is getting worse.

“Especially with the Medicaid crisis we have in Kansas,” he said. “It’s a huge part of our budget right now, and it’s just going to get larger and larger. And I don’t see anyone doing anything about it.”

He said he hopes his campaign will help raise his party’s profile across the state.

Besides Wilbur, the candidates for insurance commissioner are Praeger, who is seeking her second term; Republican Rep. Eric Carter of Overland Park; and Democratic Rep. Bonnie Sharp of Kansas City, Kan.

Learn more about Health Savings Accounts.

Posted by Wiley Long at 09:24 AM | Comments (1)

June 05, 2006

WI Legislators seek 'transparency revolution' for Health Savings Account owners

A leading legislative architect of health savings accounts (HSAs) is laying the foundation to take consumer-based health care to the next level. Rep. Paul Ryan, R-Wis., who co-authored the HSA provision in the Medicare Modernization Act of 2003, now has designs on making health care costs more transparent for consumers.

The traditional third-party health care payment system relies on someone other than the consumer to pay the bills and is not sustainable, says Ryan. He is a staunch proponent of consumer-directed health care, but is bothered by the absence of readily obtainable comparative data on health care costs and quality.

It took Ryan more than three years to get an answer from the Government Accountability Office (GAO) on why southeastern Wisconsin pays more for health care than comparable regions and markets elsewhere. Getting comparative health care data “should take three minutes or a visit to the HR manager,” he remarked.

The GAO’s Aug. 15, 2005, report as well as proprietary studies conducted by employers convinced Ryan that health care costs vary greatly among health care institutions in the same region. For example, a common bypass procedure at one hospital in Milwaukee costs $47,000, but $120,000 at another hospital within eight miles. The more expensive one had the best marketing and billboards, Ryan said, but the studies indicated that the best quality care was available from a hospital that charged $65,000 for the procedure.

Ryan wants health care institutions voluntarily to provide more transparent health care costs so consumers will be able to make more informed decisions based on “apples to apples” comparative cost and quality data. His stance is in line with the Bush administration’s health care policy, which, as the administration notes in a web site overview, seeks a “transparency revolution” in health care costs.

As of this year, the administration is requiring transparency from insurance plans participating in federal programs. The Federal Employees Benefits Program and the military’s Tricare system are asking contractors to provide price and quality information. The president also is asking health care institutions and insurers to step forward and make information on prices and quality available to all patients.

Ryan hopes the health care industry will respond and start reporting comparative health care costs and quality data, but he said that if it does not step up to the plate, the government will do it for them. As he put it, “there is a divorce between costs and quality in health care and consumers that has to end.”

Advanced refundable tax credit

Transparency alone won’t solve the health care crisis, Ryan acknowledged. He already has co-sponsored the Health Coverage for the Uninsured Act (H.R. 1872), which proposes an advanced refundable tax credit to help the more than 45 million Americans without health insurance obtain health care. Under President Bush’s health care proposal, low-income families would be able to receive up to $3,000 in a refundable tax credit to purchase HSA-qualified insurance.

Bush has floated this proposal in previous years, and been criticized for not adequately budgeting for the proposed credit. When asked how the credit would be funded, Ryan responded that he is calling for $150 billion over 10 years. He didn’t elaborate on which budget offsets he favored, saying instead that Congress would need to “think out of the box” to create “enough fiscal space to account” for it.

“We are at a proverbial fork in the road” with health care, he commented, describing the current system as “imploding.” In Ryan’s view, the country has a choice with health care between socialism or consumerism, which he described as consumers “voting with their feet.”

‘Tax shelters for the wealthy and healthy’

Although Ryan is convinced consumerism is the best model, he acknowledged that consumer-directed health care has had its critics from its infancy.

When HSAs surfaced in the Medicare legislation, Rep. Pete Stark, D-Calif., issued a statement predicting that they would “destroy health care for the employed who get their health insurance from employers.” Stark said HSAs would turn out to be “tax shelters for the wealthy and the healthy,” and predicted that they would advance an “objective of undercutting employer-provided health coverage.”

Not so, according to Ryan, who thinks HSAs are an essential part of health care in the future. Already, as of January of this year, 3 million people are insured through HSAs and 42 percent of HSAs were purchased by those who previously were uninsured. In addition, Ryan said that 45 percent of those purchasing HSAs earn $50,000 a year or less and 50 percent are at least 40 years old.

But transparency is key to put health care in the hands of consumers rather than health maintenance organizations or the government, he emphasized. That is why, as a long-shot candidate to chair the House Budget Committee next year if Republicans retain control of the House, Ryan is trying to move the discussion about transparent health care costs “front and center.”

At HSA for America, we applaud the work of Rep. Ryan.

Posted by Wiley Long at 10:54 AM | Comments (1)

May 29, 2006

Wisconsin Health Savings Account Update

Wisconsin is one of only six states that do not give a tax deduction for money put into a Health Savings Account (HSA). A bill was recently passed in Wisconsin that would give the citizens of that state the same deduction that most other Americans are allowed. However, Gov. Jim Doyle (D) decided to veto this bill.

Though the federal government allows consumers to deduct their HSA contributions from federal taxes, Wisconsin is one of only six states that does not give the same break on state taxes. In 2004 Doyle vetoed an earlier bill the legislature passed to create such a tax credit.

"Our goal is to create a more consumer-driven health care system in Wisconsin, and the first step has to be having access to HSAs," said Sen. Alberta Darling (R-Milwaukee), who sponsored A.B. 4 in the Senate. The bill passed on an 18-14 vote April 25; the General Assembly had passed it 60-36 in February.

"HSAs help people become more motivated," Darling said. "It's their money, and then they become more savvy consumers of health care, because they have a vested interest in it. That will change health care in Wisconsin, because we have some of the highest costs in the country."

The HSA bill would have given state residents a 6.5 percent credit for the amount they claimed as HSA contributions on their federal taxes. But critics, including Doyle, called the tax breaks "elitist," claiming they will benefit only the rich and not the rising number of low-income workers who are choosing HSAs.

State Rep. Mark Honadel (R-South Milwaukee) had this to say:

"Some people say HSAs do not help people of lesser income, and that's just false. If a young person starts in the workforce and starts an HSA, he can save just the same way as the next guy. It's not dependent on wage structure. It just comes down to the fundamental issue of do we want government to take care of us all the time, or do we want to take care of ourselves? A lot of people want to take care of themselves, especially if they're young and healthy."

"Unfortunately, I think our governor is one of the last in the country that continues to veto this legislation, so it's becoming very frustrating," Honadel continued. "As a team in Wisconsin, [the legislature] has been passing very good HSA legislation, but the governor keeps vetoing it. So we either have to get a new governor, or he has to wake up."

Darling said she would reintroduce the bill in the next legislative session.

"We passed [similar] legislation two years ago. We could have been up and running by now," Darling said. "People are going to hear about this in November."

We of course think that HSA contributions should be deductible on Wisconsin state income tax returns. Nevertheless, they are deductible for Federal Income taxes, and can save you up to $1,700 or more each year.

Visit us at http://www.health--savings--accounts.com for information on Health Savings Accounts. You can also see a list of other HSA State Income Tax standings.

Posted by Wiley Long at 12:03 PM | Comments (0)

May 22, 2006

Poll suggests congress should make Health Savings Accounts available to seniors

An overwhelming majority of Americans believe Congress should step in and fix federal law to allow seniors on Medicare to establish health savings accounts. Commissioned by the HSA Coalition, a new Zogby International survey shows fixing the law would help seniors pay for health care. Dan Perrin, president of the HSA Coalition said, "it is well past the time Congress fixed the failed Medicare HSA provision. It's been on the books for a decade, without a single Medicare HSA being offered to a single senior citizen on Medicare."

The poll showed that 88 percent of respondents favored congressional action on the matter, clearing the way for the accounts for seniors and setting straight a problem that has kept them from establishing the accounts, even though a federal law allowing the accounts for seniors has been in place for more than a decade.

Support for the action is widespread across political and demographic lines. Among Democrats, 89 percent favor the action, while 88 percent of Republicans support it. Both the young and old also favor congressional action - 86 percent of those ages 55 to 69 favor it, while 89 percent of those age 25-34 and 91 percent of those 35-54 also back it.

Favor for fixing the problem for senior Medicare HSAs also spanned geography, as nearly 90 percent of respondents in every region of the nation said they supported congressional action. The poll showed similar responses across all income brackets.

Asked whether seniors should be able to learn the dollar value of their Medicare benefit so they can use those funds to purchase an HSA qualified health plan, and deposit the remaining balance in their Medicare HSA, 86 percent of respondents in the poll agreed.

Ninety-one percent of those in the eastern U.S., 86 percent of those in the South, 84 percent of those in the Midwest and 81 percent of those in the West agreed that seniors should be told what the cash value of their Medicare benefit would be, so that they could consult their insurance agent to buy their Medicare health plan and to deposit the cash left over into a Medicare HSA.

The survey showed that a majority of Americans are familiar with health savings accounts, which are growing in popularity as a tool to help families deal with health care expenses. The HSA program allows people to save money in a tax-favored account and must be used for medical expenses. The survey showed that 13 percent of Americans now own a health savings account of their own.

The Zogby International survey was conducted April 19-25, and included 1,020 respondents nationwide. The poll carries a margin of error of plus or minus 3 percentage points.

Learn more about Health Savings Accounts at http://www.health--savings--accounts.com

Posted by Wiley Long at 09:22 AM | Comments (1)

May 19, 2006

CO House Passes Discount Drug Plan For Health Savings Account Holders

The Colorado House is backing a plan to sell discounted drugs to the state's estimated 750,000 uninsured residents and thousands of small business employees.

The proposed plan would be open to any resident without health insurance as well as people covered by health savings accounts, which usually don't have drug coverage. A lot of Health Savings Account holders work for small businesses that can't afford traditional health insurance plans.

Under the plan (Senate Bill 1), the state would enter into a buying pool with other states to buy drugs at a discount for people on Medicaid, the state insurance plan for the poor. Those same discounts would be available to any uninsured Coloradan regardless of income.

To join a pool, the state would have to come up with a list of the most effective and cheapest drugs to treat its Medicaid patients. That's one of the reasons Owens vetoed similar legislation last year.

Some Medicaid patients, including the disabled, feared their health would be at risk if the best drugs to treat their conditions weren't included on the preferred drug list. This year, the proposal would allow the state health care policy department, rather than a separate panel, to draw up that list. Sen. Bob Hagedorn, D-Aurora, said Owens could ask the department director to include any drug he wants to.

Owens' spokesman Dan Hopkins didn't immediately return a phone call seeking comment.

Rep. Alice Madden, D-Boulder, said drug lists were widely used by private health insurance plans to save money and it makes sense for Colorado to be just as frugal and take advantage of bulk buying.

"We believe the state should shop at Costco rather than going to Saks Fifth Avenue or Nieman Marcus," she said.

The proposal was passed one day after another drug bill was killed by lawmakers.

House Bill 1100 was backed by drug companies and organized labor and modeled after one used in Ohio. Supporters promised discounts on drugs up to 30 percent but pharmacists complained that they would be forced to bear much of the cost of those discounts, partly because drug companies don't issue rebates on generic drugs. About 70 percent of the drugs sold under the Ohio plan since last year have been generics.

Pharmacists, the AARP and the Consumer Public Interest Research Group helped kill that proposal and backed Senate Bill 1, which is similar to a Maine program. According to AARP, it saved people an average of 50 percent on generic drugs and about 24 percent on generics.

The bill also is supported by the National Federation of Independent Business because it would cover those in health savings accounts. However, Rep. Lauri Clapp, R-Littleton, worried it may encourage some employers to drop expensive health insurance coverage.

NFIB Colorado director Tony Gagliardi doubted employers who currently buy traditional health insurance plans would give them up because they provide much lower drug prices to patients than drug buying pools ever can.

He said state statistics showed that the number of people using health savings accounts grew from 1,075 in 2004 to about 26,000 in 2005. Over 70 percent of the new participants didn't have previous health insurance at all, he said.

Learn more about Health Savings Accounts and what they can do for you at http://www.health--savings--accounts.com

Posted by Wiley Long at 10:46 AM | Comments (0)

May 18, 2006

President Details Health Savings Account Plans

President Bush detailed his comprehensive strategy to make Health Care more affordable and available for all Americans through Health Savings Accounts (HSAs), improved price transparency, and other innovative reforms. The Administration says they are determined to reduce health care costs by pursuing practical, commonsense reforms that will improve quality and increase choice.

"America leads the world in health care because we believe in a system of private medicine that encourages innovation and change. The best way to reform our health care system is to preserve this system of private medicine, strengthen the relationship between doctors and patients, and make the benefits of private medicine more affordable and accessible."

The following is a portion of the White House Fact Sheet:

The President Has Five Key Policies To Make Health Care More Affordable And Available For All American Families

1. Expand Health Savings Accounts (HSAs). HSAs lead patients to demand more value for their money by enabling them to control their health care spending.

- HSAs Have Two Components: Low-Cost Catastrophic Insurance Coverage And Tax-Free Savings Accounts. Catastrophic coverage provides protection in the event of a devastating medical illness. HSAs allow Americans to contribute to a tax-free account to pay for routine medical needs and to build up savings by rolling over any contributions unspent in a given year. HSAs can help us move our health care system away from one where a third party pays for most of the costs to one where consumers make their own health care decisions.

- HSAs Are Making Health Care More Affordable And Accessible. From March 2005 to January 2006, the number of HSAs tripled from 1 million to more than 3 million. Forty percent of those who own HSAs have family incomes below $50,000. More than one-third of those who bought HSAs on their own had previously been uninsured.

- HSAs Are Helping American Hospitals. More insured Americans means fewer people arriving at our Nation's hospitals needing uncompensated care.

- The President Believes Congress Needs To Give Americans Who Buy HSA Policies On Their Own The Same Tax Breaks As Those Who Get Their Health Insurance From Their Employers. Under current law, the self-employed, the unemployed, and workers at companies that do not provide health insurance are at a great disadvantage. The President also believes Congress should fix the tax code to raise the limit on tax-free contributions to HSAs. In addition, the President has proposed a refundable tax credit to help low-income Americans purchase health coverage on the individual market. Under his proposal, low-income families can receive up to $3,000 in a refundable tax credit to purchase HSA-qualified insurance.

- Health Insurers Should Be Allowed To Sell Portable HSA Policies Nationwide. Today, the savings in health accounts are portable, allowing savings accounts to be taken from job to job. However, the health insurance within HSAs is often not portable because of outdated laws and practices that prevent insurers from offering portable policies.

- The President Calls On Congress To Move Bills That Improve Tax-Free Health Savings Accounts. These bills will end many of the biases in the tax code, provide a tax credit of up to $3,000 for low-income families, and make HSAs more attractive to millions of Americans.

2. Increase Transparency. To get the best quality care for the best price, patients need to know in advance what their medical options are, the quality and expertise of doctors and hospitals in their area, and what their medical procedure will cost. HHS Secretary Michael Leavitt is encouraging leaders in the health care industry to post their "walk-in" prices to all patients, and the President has directed HHS to make data on Medicare's price and quality publicly available on the Internet. The Administration is also asking insurance companies to increase health care transparency by providing their negotiated prices and quality information to their enrollees – and the Federal government will do the same.

- To Help Spur This Transparency Revolution, The Administration Will Require Transparency From Insurance Plans Participating In Federal Programs. Beginning this year, the Federal Employees Benefits program and the military's Tricare system are asking contractors to provide price and quality information. The President is also asking hospitals and insurers to make information on prices and quality available to all patients, increasing transparency without the need for legislation from Congress to require transparency by law.

3. Apply Modern Information Technology. Too many doctors' offices and hospitals have the most advanced technology of the 21st century but still use last century's filing systems for managing medical records. A nationwide information network will protect the privacy of a patient's medical information while making health information available in real-time. We are making good progress toward the President's goal that most Americans have an electronic health record by 2014.

4. Enact Association Health Plans (AHPs). Unlike big businesses, small companies cannot negotiate lower health-insurance rates because they cannot spread their risk over a large pool of employees. AHPs would allow small firms to band together across state lines and buy insurance at the same discounts available to big companies. The House has approved AHP legislation four times during the President's Administration, and it is now time for the Senate to pass legislation that makes health insurance more affordable for small businesses.

5. Enact Medical Liability Reform. The glut of frivolous lawsuits are driving good doctors out of practice and driving up costs by forcing many doctors to practice defensive medicine – ordering unnecessary tests and writing unnecessary prescriptions. The total cost of defensive medicine to our society is an estimated $60 billion to $100 billion per year, including $28 billion billed directly to taxpayers through increased costs of Medicare, Medicaid, VA, and other Federal health programs. Junk lawsuits are a national issue requiring a national response. The House has passed a good medical liability reform bill, and it is time for the Senate to act.

See the entire White House Fact Sheet on Making Health Care More Affordable and Accessible for All Americans

Posted by Wiley Long at 11:06 AM | Comments (0)

May 16, 2006

Coalition on Health Savings Account Coordination

The Coalition on Health Savings Account (HSA) Coordination is supporting the introduction of the Tax-Free Health Savings Act by Rep. Eric Cantor (R-VA) according to the Coalition's chairman Duane Olson, who manages employee benefits plans at Deere & Company.

"This bill represents another step forward in the process to truly transform our health care system, and that transformation begins with the active participation and engagement of our employees," Olson said

"We applaud the bill and specifically want to congratulate Congressman Cantor for his inclusion of two important provisions he had previously championed in HR 4511. This bill will increase the current contribution limits to promote widespread adoption of HSAs and permit coordination of HSAs with other popular accounts, like flexible spending accounts (FSA) and health reimbursement arrangements (HRA)."

Olson continued: "The real challenge facing employers as they seek to adopt HSAs is the reality that a significant percentage of their employees are burdened by the high deductible, especially those with lower incomes or chronic care conditions. Permitting coordination of different plans -- like flexible spending accounts and health reimbursement arrangements -- will accelerate the growth in health savings accounts by ensuring that these accounts make sense for all working Americans and enable employees to plan, budget, and manage their own personal responsibility."

"As the legislative process moves forward, our hope is that the five year period allowing coordination will be expanded so that working Americans and their families can enjoy the many complementary benefits that each of these accounts offers into the future," Olson said. "At a time when American families' personal savings rates are low and health costs are growing, promoting educated health care decisions by informed consumers is not only smart policy, it's smart living."

Background on Coalition

The Coalition on HSA Coordination was created in 2005 to examine the issues underlying the expansion and strengthening of Health Savings Accounts. Recognizing the positive impact of HSAs on small businesses and the uninsured, the Coalition pairs the experience and leadership of many of America's medium-to-large employers and explores the potential for coordinating an employee's Health Savings Account with other personal accounts.

The goal of coordination is simple: to provide a full continuum of flexibility for high deductible health insurance plans with Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs). By allowing the employee to coordinate these accounts, he or she can better manage their total annual costs, saving both the employee and employer from double-digit increases in premiums.

Posted by Wiley Long at 08:15 AM | Comments (0)

May 12, 2006

More people will start companies, thanks to Health Savings Accounts

One of the White House's key health care goals for 2006 is to make Health Savings Accounts more attractive. President Bush has asked Congress to raise the limit on how much money can be contributed to an HSA per year. He would also like to create a tax deduction for all out-of-pocket expenses paid via an HSA that is set up individually rather than through an employer. Furthermore, the Bush plan would let taxpayers write off insurance premiums for high-deductible health insurance plans that they obtain outside of a traditional employer-sponsored health plan. What will this do for aspiring entrepreneurs?

Health Savings Accounts are a great innovation, and not simply because they provide employers with a way of buying cheaper coverage for their workers at a time when health care costs continue to rise. They also provide an aspiring entrepreneur with a health insurance cushion so that he or she feels more comfortable leaving a job that provides coverage in order to start a company.

Think back to the time when you were first contemplating striking out on your own. You most likely had a job at a company that paid you a nice salary and offered a retirement plan and other benefits. Starting a business meant giving up the safety net your employer had provided. And since you probably couldn't afford to take a comparable salary at first, you also faced a variety of unappetizing choices like dipping into savings, or running up credit card debt, or borrowing money from your friends and family.

But although becoming an entrepreneur involves taking a huge financial risk, I'll bet that didn't faze you nearly as much as the decision to walk away from your employer's health insurance plan. Giving up coverage is a difficult step to take, especially if you have a family. This is why so many entrepreneurs treat their start-ups as moonlighting gigs for months and, in some cases, years after they launch.

So what does this have to do with health savings accounts? In health care industry jargon, HSAs are portable, which means that people can take an HSA plan with them when they leave a job. The balance also rolls over from one year to the next, so any money that goes unspent accumulates with interest. This is income that workers set aside on a pretax basis. And in some cases, it's not even their money. Employers who adopt HSAs to reduce the cost of their health insurance plan can use the savings to fund some or all of their employees' accounts.

We're not talking about huge sums, of course. HSAs came into existence only two years ago, and many people spend what they place in those accounts each year. Plus, there are limits on how much money you can deposit annually. Currently, individuals are allowed to save up to $2,700, while families can save up to $5,450 per year. Even if a would-be business owner has only a few thousand dollars saved, however, that money enables him or her to pay for basic medical expenses like doctor visits, pharmacy bills, and new eyeglasses.

Like any health care alternative, HSAs involve tradeoffs. A start-up entrepreneur must pair his or her HSA with a High-Deductible Health Plan (HDHP) that will cover major medical expenses. In some cases, it's possible to continue to use an individual insurance policy set up by a previous employer. But in states that have "community rating" laws, which are intended to prevent insurance companies from charging different rates to different individuals, obtaining high-deductible coverage may be difficult.

Assuming that an entrepreneur qualifies for this type of insurance, there is still risk involved. The government caps the amount of money an HSA holder can be asked to pay out of pocket--$5,250 for individuals and $10,500 for families--but that's still a lot. And if a person has $1,000 in an HSA, and a $5,000 deductible, a $4,500 medical expense could be extremely painful.

Still, even critics allow that having an HSA is better than no coverage, which is exactly the circumstance faced by many start-up entrepreneurs and the people they recruit to come work for their young companies. A lot has been written about HSAs from a consumer perspective, but one of their least-understood benefits is that they provide a little security to the person who wants to take the entrepreneurial leap.

Posted by Wiley Long at 10:25 AM | Comments (0)

May 09, 2006

Consumers Want Health Savings Accounts

Getting policymakers to understand the value of health savings accounts (HSAs) may best be done by introducing them to constituents who own HSAs or high-deductible health plans (HDHPs).

That was the purpose of a March 29 briefing on Capitol Hill sponsored by America's Health Insurance Plans (AHIP) and the National Association of Health Underwriters (NAHU). All seats were taken, and people lined the back of the room as congressional staff and media heard Health Savings Account owners and insurance brokers discuss why HSAs work for them. Listen to what they had to say:

Better Method

"One of my small business customers moved to a health savings plan so they could hang onto coverage," said Misty Baker, an insurance agent from Austin, Texas. "Soon after, they were blessed with three beautiful babies. Like all infants, those babies needed lots of preventive care. One of the strong points of their HSA plan - in addition to lower premiums - is that it covers all the well-baby care, like routine immunizations, even before their deductible is met. This gave mom and dad peace of mind, not to mention some extra money left over for diapers."

When John Ghysels' father was 48, he had a massive heart attack and required triple-bypass surgery. Ghysels, of northern California, is now in his 40s and trying to avoid his father's experience partly by taking cholesterol-lowering drugs.

"Some people say you shouldn't be in an HSA if you think you might have health expenses," Ghysels said. "I disagree. I am saving about $80 a month on premiums, which helps free up dollars for other medical expenses. Second, having an HSA has made me conscious of prices, and I have found some ways to get real bargains. For example, I've saved about 75 percent off the price of prescription drugs by doing simple things like buying from discount outlets, such as Drugstore.com and Costco. I found they charge about 67 percent less for my generic medications than the corner retail drug stores.

"On my brand name medication, I learned that the manufacturer charged the same for a 40-mg dose as they did for a 10-mg dose," Ghysels said. "So, in accordance with the manufacturer's instructions and my physician's permission, I simply split my pills. This allows my 90-day supply to last me for an entire year. It was easy, perfectly safe, and cost me lots less than even my old HMO co-pay. Just imagine if we approached all of health care this carefully. I think it would be a good thing."

Rising Premiums

Chris Krupinski, a widow with three children living in Fairfax, Virginia, has run her own business for the past decade. But she said she found it difficult to stay with one health insurance company during that time, because the premiums would rise every 18 months.

Before purchasing her HDHP in 2004, Krupinski's PPO policy cost her $10,800 a year in premiums and carried a $2,000 deductible. When HSAs were created, she learned she could get one for $4,200 a year with a $3,500 deductible. Now, she said, she comes out ahead in several ways.

"Every month, I put about $350 into my HSA and pay $350 for the premium," Krupinski explained. "That HSA is my money, and yet I am still paying less per month than I was under the old policy. As far as I'm concerned, I look at my deductible as a 'no-deductible' plan. The beauty of this is that if I have anything left over at the end of the year, that money is mine. It gives me options, and it is much better financially.

"Before, when I wrote those premium checks out each month, that money was just gone," Krupinski noted. "Also, my business is somewhat cyclical, so in the summer, when business and my income slow down, I have the flexibility to put less into my HSA."

Unique Advantages

Ronnie Miles, a 36-year-old Democrat from Baltimore, had to make a choice between health insurance and his mortgage when he formed his own consulting business three years ago. He chose the mortgage, going without coverage for two years. Now he has an HSA.

He's found that in addition to paying his medical expenses, an HSA has several advantages over more traditional plans.

"I have already used my HSA money to pay for dental visits, eye exams, and glasses," Miles said. "These services were not covered under my more expensive PPO, but by using the HSA dollars, I could use pre-tax dollars and get negotiated rates."

A Gallup poll released the last week of March revealed Americans believe their most pressing concern is the "availability and affordability of health care," with 68 percent saying it worried them "a great deal". Not the war. Not terrorism, not the economy. Congress has the chance to press for more market-based solutions to ensure more choices like Health Savings Accounts are available. If their political radar is working, they will listen.

Posted by Wiley Long at 07:24 AM | Comments (1)

May 04, 2006

Tennessee looks to Health Savings Accounts

Health savings accounts could be one of many incentives designed to convince small businesses and individuals to support Gov. Phil Bredesen’s proposal to provide health insurance to low-income employees of small businesses.

Incentives will initially include allowing participants to continue an HSA plan when they leave a job, low deductibles and rewards for healthy living.

There is language in the bill that allows the program to apply health savings accounts (HSAs) to the high-risk pool, but Bredesen would eventually like to allow for the small businesses to be eligible for them as well. The governor said, however, that because of the $150-per-month average premium, HSA plans are probably not the most useful way for individuals to manage their spending at the start.

“It’s a little bit of a skinny plan to make it work in the classical way right now, but I’ve tried to put all the hooks in place so as this grows, there’s a natural way of incorporating that concept,” Bredesen said.

The incentives are part of the same movement toward consumer-driven health care, said Paul Keckley, a Vanderbilt University health economist. He said 4.3 million people had a health savings account by the end of last year, due in large part to a major push from large insurers like Humana and United Health Care. Keckley lauded Bredesen’s proposal as a “great start,” but noted that the effort is in its early stages.

“I think everyone acknowledges that this is going to be transformative and a long process to really shift from an employer-based health insurance system to a consumer-based health insurance system in which health insurance is purchased the same way in which you might purchase automobile insurance,” he said.

But HSA plans have high deductibles, ranging from $2,000 to $5,000 per year and Bredesen doesn’t want that kind of deductible for Cover Tennessee. Eventually, HSAs could be a tool for keeping people in the program, Bredesen said, by making them an added benefit.

“You have the ability to allow people to build up equity in the plan,” Bredesen said.

In February, Keckley conducted a study to determine whether consumers are able to navigate the health care system and Keckley found that, overwhelmingly, they aren’t.

“We have pretty well anesthetized consumers to the cost and quality of health care, and just throwing this HSA at people without having tools in place so we can navigate more effectively, I think, is a policy mistake,” Keckley said.

Bredesen has budgeted $100 million of TennCare reserves to cover the first three years of the program.

Posted by Wiley Long at 10:22 AM | Comments (0)

April 28, 2006

Treasury Secretary John Snow Forecasts Health Savings Accounts to change Healthcare

At a time when mounting healthcare costs threaten to devour an ever-increasing piece of the U.S. gross domestic product, Treasury Secretary John Snow says the nation is at a policy crossroads.

On the one hand, he told assembled healthcare executives at the World Health Care Congress, there is the nationalized, single-payer healthcare plan proposed by some, which Snow said would lead to shortages and ultimately, rationing.

On the other hand, there is the Bush administration's vision of harnessing the "incentivized consumer" by using Health Savings Accounts to improve quality and lower prices.

"We believe American consumers are best in the world at driving down prices and driving up quality," Snow said.

Snow began by sharing his grim vision of a future where healthcare costs account for 20 percent of GDP -- more than the 18 percent of GDP that is currently accounted for by the entire federal budget.

"Healthcare is making a larger and larger claim on the resources of the U.S.," he said. "It's driving the fiscal outlook."

As healthcare eventually ballooned to take up the federal budget, spending on other things would be crowded out and the tax and debt burdens would become intolerable. "That can't be allowed to happen," he said.

Rising healthcare costs would -- and indeed already are -- also hurting the economy by reducing the competitiveness of American companies, Snow said, and depressing workers' wages when business pay workers less to compensate for rising insurance premiums.

"Healthcare is too expensive, put simply," he said.

The incentivized-consumer model Snow put forth as a way to avoid this post-apocalyptic scenario would involve the policies the Bush administration has espoused all along: health savings accounts, transparency of provider prices and quality measures, health information technology, and tort reform.

HSAs would "bring people into the process of making thoughtful decisions," Snow said, because consumers would be forced to "weigh whether something is worth what it costs because they're using their own money."

To help those who can't afford to save, the administration plans to propose a $3,000 refundable HSA, by which the government would supplement the savings of low-income individuals.

Thusly incentivized, consumers would then use information on prices and quality to shop around for care, leading to increased competition, thereby reducing the cost of healthcare, he said.

Health IT and tort reform reducing "junk lawsuits" against providers could also reduce the cost of providing healthcare, he said.

These reforms, however, would not necessarily spell the end of employer-provided insurance, according to Snow. "The employer system has been around for a long time and provides a lot of benefits. We can make changes within it that will improve outcomes."

Most employers want to provide healthcare for their employees, he said, "but in too many cases they're finding they can't afford it."

Read more about the Health Savings Account Debate at HSA for America.

Posted by Wiley Long at 11:19 AM | Comments (0)

April 26, 2006

Wisconsin Senate approves Health Care Savings Account bill

The WI state Senate has approved legislation that would give all Wisconsin residents a break on state income taxes for contributions to health savings accounts.

The bill would give a state income tax credit for six and a half percent of the amount a taxpayer claims as a federal tax deduction for contributions to a health savings account.

The 18-to-14 vote came despite Democrats' objections that the breaks will go to the rich and do nothing for the growing number of residents without health insurance.

Republicans say the tax breaks will encourage residents to open health savings accounts. They say the bill would provide small business owners, in particular, with another tool to deal with the rising costs of health insurance.

The Senate's vote sends the measure to Governor Doyle, a Democrat who vetoed a similar plan in 2004. He said at the time that the plan would not help low-income workers.

Taxpayers are already allowed to deduct their contributions to the accounts from their federal taxes. Earnings on the accounts are also tax-deductible and funds may be used tax-free to pay for HSA qualified expenses.

This is great news for Wisconsin residents interested in opening a Health Savings Account. Hopefully Governor Doyle will see the benefits of Health Savings Accounts and not veto the bill this time around.

Posted by Wiley Long at 09:15 AM | Comments (0)

April 20, 2006

Director of the National Economic Council talks about Health Savings Accounts

Since 2001, private health insurance premiums have risen 73 percent, causing some businesses to drop health care coverage and others to simply pass the costs onto workers by raising copayments and premiums. But what is driving this run-up in health insurance costs, asks Allan Hubbard, director of the National Economic Council.

Health care is expensive because people consume it as if it were free, but to control these costs, consumers need an incentive to spend money wisely. This can be done by encouraging the purchase of Health Savings Accounts with high-deductible health insurance policies and providing the same tax benefits for out-of-pocket health spending as employer-provided insurance.

Says Hubbard:

"The overall cost to the consumer will be no greater than it is now and, in most cases, significantly lower.

The president has proposed a package of reforms that will spur such changes by building on the success of consumer-directed Health Savings Accounts (HSAs) -- which allow people to save money tax-free to pay their out-of-pocket health costs -- and the insurance policies that go with them.

Since 2003, HSA enrollment has grown rapidly, with more than three million people now contributing to them.

The accounts are also a good deal for American families; catastrophic policies have affordable premiums that bring health insurance into reach for lower-income families and the low premiums compensate for most, if not all, of the policies' higher deductibles.

HSAs are also an attractive option for employers that might not otherwise provide health insurance; with premiums rising, only 60 percent of companies offered their workers health insurance in 2005, compared with 69 percent in 2000.

Furthermore, HSAs will help unleash consumer power, give consumers more choices, promote competition and increasing value and enable consumers and doctors to make health care decisions that are right for them."

Find more information on Health Savings Accounts at http://www.health--savings--accounts.com

Posted by Wiley Long at 10:32 AM | Comments (0)

April 19, 2006

Bush continues push to expand Health Savings Accounts

President Bush continues to urge Congress to pass legislation that would provide tax breaks to promote the expansion of health savings accounts and reduce health care costs. At the National Small Business Week Conference in Washington, D.C., Bush said that Congress should pass legislation that would make premiums for high-deductible health plans associated with HSAs deductible from income taxes and eliminate taxes on out-of-pocket spending through the accounts -- two proposals included in his fiscal year 2007 budget plan.

Bush said, "Congress needs to end discrimination in the tax code and give Americans who buy HSA plans on their own the same tax breaks that those who get their health insurance from their employers" receive, adding, "Small businesses can save money under this plan."

However, opponents maintain that the HSA proposals will not reduce health care costs. According to a Commonwealth Fund analysis, HSAs will make consumers more responsible for their health care costs but might not make them more effective purchasers of medical services.

It sounds like opponents are basing their decisions on sheer speculation. Unfotunately, it appears likely that Congress will not pass the HSA proposals this year.

If you are a health savings account owner, or are considering one in the near future, we urge you to write your congressperson and ask them to base their decision on the facts, not speculation or political bias.

Get the facts today at http://www.health--savings--accounts.com

Posted by Wiley Long at 09:35 AM | Comments (1)

April 17, 2006

Health Savings Accounts on Tax Day

When you file your tax return this April 17th, know that even more of your taxes will be eaten up by government spending on health care. You should also ask why so much of the income you have left over after taxes must also be spent on your own health care and health insurance. It just doesn't seem fair.

The plain fact is that the U.S. government spends more of your tax dollars "providing" health care every year. The expense is increasing rapidly, and the rate of increase for Medicare and other programs is escalating at unsustainable rates.

A huge new wave of government spending is coming on line this year to pay for the Medicare Prescription Drug Program. At the same time, what you have to pay for your health care or health insurance will increase even faster. Since the 1960s the government share of health care spending has increased from less than 10% to more than 50%. This may seem illogical. It is not. It is the ruthless logic of cause and effect. Your health care costs will continue to escalate not in spite of government involvement with health care, but because of it.

How can anyone seriously think that if cost is the problem, the Federal government is the solution? As P.J. O'Rourke has remarked, "If you think health care is expensive now, just wait until it is free."

Contemporary medicine, from the development of new prescription drugs, to revolutionary diagnostic tools, to innovative new treatments and breakthrough surgical procedures, is a highly technological achievement. It is all changing at breathtaking speed. It is based on dynamic science that the government cannot begin to understand, let alone micro-manage. Government cannot add clarity to the process. It can probably destroy a lot of this progress through rationing, controls, bureaucracy, and political favoritism. And the government approach, such as pumping in a lot more money, adding to 130,000 pages of Medicare regulations, and hiring more regulators, just adds to the cost of cost control. The government cannot even control the cost of something as straightforward as postage stamps!

Health care can be expensive. Innovation, breakthrough technologies, and new drugs all require brains, hard work, and freedom. Private investors require one other thing that government programs do not: results. Government spending and controls will chase away the investments that get those results, and attract those who want to build administrative empires with your taxes.

A near government monopoly on anything becomes an enormous magnet that draws in special interests, political cronies, and anyone with an agenda that cannot resist the levers of power. Would powerful national health care unions focus on better health care or on higher wages and shorter hours for their members? Would politicians serve first the interest of patients, or those of workers whose paychecks are automatically tapped every month to make political contributions? Would medical research benefit everyone, or just those with "politically correct" diseases? Would public assistance go to those least able to afford insurance or to those with the most political pull? The possibilities that politicians can exploit are endless.

The best way to keep down both taxes and costs is to keep control of our own health care. That means that we must take responsibility to insure that it is paid for. Recent tax code provisions for Health Savings Accounts (HSAs) can help us do this. In conjunction with low-premium, high-deductible health insurance policies, HSAs put health care within the financial reach of most Americans. These HSAs can be improved by allowing larger contributions and tax exemption for the cost of insurance premiums.

If you would like to have a healthier experience on April 15th in future years, look into tax-free Health Savings Accounts at HSA for America. Take advantage of new market developments like health clinics in large retail stores, or cash-for-service options, which reduce billing and administrative costs. Also, fight to liberate your health insurance premiums from the burden of tax and to keep the heavy hand of government-managed health care from threatening your life.

Posted by Wiley Long at 08:31 AM | Comments (0)

April 14, 2006

Health Savings Account Tax Deadline Reminder

For one reason or another, there are thousands of individuals who have already purchased a High Deductible Health Plan (HDHP), but have yet to open a Health Savings Account for tax year 2005.

April 17, 2006 is the last day that you can open and contribute to a Health Savings Account to receive a tax deduction for the tax year 2005. You must have had a qualified High Deductible Health Plan (HDHP) in place for at least one full month in 2005 to open a Health Savings Account and claim an HSA deduction for 2005. You must pro-rate your contributions by the number of full months you had the HDHP.

- Shop for the HSA that fits you. Usually the HSA providers the insurance companies recommend have the highest costs. It’s worth your time to shop HSA prices, just as you would shop for health care prices. Make sure you compare the different HSA providers’ fees. Some providers charge monthly or annual fees, while some even charge to use the debit card. These costs can add up. See a list of HSA Administrators to compare features.

- Always keep you qualified health care expense receipts.

- Investment options. You may want to use your HSA as a investment account, and continue to pay your health care costs out of pocket. There is no time limit for when you can reimburse yourself for your health care expenses; you just need to keep legible receipts and records in case you do reimburse yourself at a later date, or in case you are audited.

You are not allowed to reimburse yourself for qualified health care expenses until you open a Health Savings Account, so whether you purchased your Health Savings Plan last year or it took effect sometime this year, the most important thing to do is to establish an HSA somewhere, so that you can reimburse yourself going forward.

Visit us at http://www.health--savings--accounts.com for more infomation on Health Savings Accounts and all the Tax advantages available.

Posted by Wiley Long at 10:51 AM | Comments (0)

April 05, 2006

Bush remarks on Health Savings Accounts at a meeting for Health Care Initiatives

We wanted to bring you encouraging remarks from President Bush at a meeting on health care initiatives:

THE PRESIDENT: America needs a health care system that empowers patients to make rational and smart decisions for themselves and their families, a health care system in which the relationship between the patient and the provider are central, not a health care system where decisions are made by the federal government.

So we've been having a discussion here today about how to make sure our health care system meets certain objectives: one, empowering the patients; two, how do we have a system that helps control rising costs in health care? One of the interesting and innovative ways to do that is through health savings accounts.

Health savings accounts are good for the uninsured, they're good for small businesses, they're good for larger corporations. And people around the table here have been sharing their experiences with how folks are saving money through health savings accounts. And I would urge the small business owner or the individual who is concerned about his or her health care to take a look at a health savings account.

We talked about the importance of cost savings through these important products, but we also talked about how we can work with the United States Congress to strengthen them; to make them more appealing; to give people more choices in the marketplace, to say to the American people, we trust your judgment, we trust you to make the right decision for you and your families.

And so I want to thank you all for coming for this most interesting discussion. And I'll be glad to take a couple of questions.

Nedra (from the press core).

Q Yes, sir. Thank you. I'm wondering if we can get your reaction to Tom DeLay's resignation? Do you think it hurts the Republican Party or your ability to get work done in Congress?

THE PRESIDENT: I had a talk last night on my way back from the ball game with Congressman DeLay. He informed me of his decision. My reaction was it had to of been a very difficult decision for someone who loved representing his district in the state of Texas. I wished him all the very best and I know he's looking forward to -- he's looking to the future.

My own judgment is, is that our party will continue to succeed because we're the party of ideas. And one of the most important ideas is to make sure that health care is available and affordable for the citizens of this country. One way to do so is to trust the patients, trust the American people when it comes to making rational decisions for health care for them and their families. And that's exactly what we've been discussing here at the table.

Caren (press core).

Q Thank you, sir. Your new Chief of Staff takes over soon, and I'm wondering, is there likely to be far-reaching changes in the staff at the White House? And is Secretary Snow expected to stay on?

THE PRESIDENT: Secretary Snow is here at the table. He's been a part of this discussion. I'm glad you brought him up. He has been a valuable member of my administration, and I trust his judgment and appreciate his service.

I've, as you know, accepted the resignation of Andrew Card, my long-time friend, a person who will go down in the annals as one -- a really fine Chief of White House in the history of the White House. I've asked Josh Bolten to take his place. Josh has served us very well as the Director of the Office of Management and Budget. I told Josh that he is -- will organize the White House in such a way that he is comfortable with and that meets my needs. And my needs are to have good, crisp information so I can make decisions on behalf of the American people.

And I look forward to Josh's recommendations as to how to get this White House to -- for the last two-and-a-half years of my administration to continue to function in an effective way, and it functioned very effectively under Andy Card, by the way. I'm most proud of his administration and proud of the team that he assembled.

Dick (press core).

Q Mr. President, the situation in Iraq continues to be fraught with violence. You have expressed impatience in recent days of the progress towards forming a coalition government. Do you think, as some people on the ground there are saying in the Iraqi political firmament, that has been very close to the point of no return?

THE PRESIDENT: I believe that people ought to pay attention to the fact that three months ago, or a little over three months ago, 12 million people went to the polls and said, I want to live in a democracy. And there is a group of folks in Iraq that want to stop the advance of democracy, and therefore they're willing to use violence to do so. The one way to help bring confidence to the Iraqi people that those few will not be able to determine the future of that country is for there to be a unity government that steps up and says, I'm willing to lead.

And so I sent Secretary Rice to Iraq with that message. And the message is, is that the people of Iraq have voted, and now it's time for the elected leaders to stand up and do their job. So we look forward to working with them to put together a unity government, a government that will reject the sectarian violence, will reject the militias, reject Zarqawi and the terrorists that are trying to create enough chaos so that America loses nerve. And I'm not going to lose my nerve as the President, because we're doing the right thing in establishing a democracy in that country. And by establishing a democracy, we're laying the foundation for peace.

And that's what we want. We want there to be peace. We want our children not to have to grow up under the threat of violence coming out of the Middle East. And one of the lessons of September the 11th, 2001, is that this sense of -- that tyranny is okay, but underneath the surface there was resentment. And the way -- and anger, that became the breeding grounds for these killers. And the best way to defeat that is with the light and hope of democracy. And you bet it's tough in Iraq. And it's tough because people are trying to stop the advance of democracy. And I'm convinced we're making progress there. But I do urge the folks on the ground to get that unity government in place, so that the Iraqi people have confidence in their future.

Thank you all.

Obviously, the president (and our nation) have a lot of pressing issues on the table right now, but we're glad to see one of them is our Healthcare System. While we don't side for one party or the other, we believe the Bush administration is making great strides in the area of Healthcare. With a bigger push toward price transparency and more support for Health Savings Accounts, this administration is headed in the right direction.

With improved and continuing support, Health Savings Accounts will continue to grow and help the deteriorating situation of our Healthcare system.

For more information on Health Savings Accounts, please visit us at: http://www.health--savings--accounts.com/

Posted by Wiley Long at 11:01 AM | Comments (0)

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 08:50 AM | Comments (0)

March 20, 2006

Health Savings Accounts already helping the Uninsured

Until recently, much of the data available on Health Savings Accounts has come from individual carriers, conservative think tanks and trade associations. Health Savings Account skeptics have doubted their figures - which show 33 to 40 percent of those purchasing Health Savings Accounts were previously uninsured.

The first academic research on Health Savings Accounts, published in the November/December issue of Health Affairs, reviews the relative merits and potential of various proposals to expand Health Savings Account affordability for the uninsured.

The team performed sophisticated forecasting simulations of the extent to which several different policy proposals - including Bush's health care tax credit for HSAs - would:

- Reduce the number of uninsured.

- Reach the low-income uninsured.

- Cause people receiving employer-subsidized group coverage to drop it and move to the individual market (presumably for a better deal).

Overall, the authors concluded that "widespread national adoption of individual HSA plans is possible" and early indications are that HSAs are a viable alternative to existing types of health plans.

"The academic community finally is coming around to see that Health Savings Accounts, in conjunction with refundable tax credits, could dramatically reduce the number of uninsured," said Grace-Marie Turner, president of the Galen Institute. "It will be very hard for opponents of Health Savings Accounts to ignore this study in the top health policy journal. This is an important breakthrough."

At HSA for America, close to 50% of the HSA plans we sell are being purchased by people who were previously uninsured. Health Savings Accounts are a viable alternative for uninsured individuals and families who until now have been unable to afford health insurance.

You can find extensive information on HSAs at http://www.health--savings--accounts.com

Posted by Wiley Long at 11:55 AM | Comments (0)

March 17, 2006

Health Savings Accounts coming to Medicare

Mark McClellan, administrator for the Centers for Medicare and Medicaid Services, said in an interview with The Associated Press: "The administration is looking for ways to bring health savings accounts to the Medicare program. The Bush administration wants to expand the use of the HSA accounts and has proposed tax breaks designed to make them more popular."

"As Health Savings Accounts have become much more popular in the under-65 market, it's time to make them available in Medicare as well", McClellan said.

Needless to say, this is great news for people on Medicare. I'll keep you posted on the progress of this issue.

http://www.health--savings--accounts.com

Posted by Wiley Long at 10:12 AM | Comments (2)

March 16, 2006

Socialized Medicine or Health Savings Accounts?

Do we really want Socialized Medicine in the country? Is a blanket "health insurance for all" the answer to our healthcare problems? Or will Health Savings Accounts and consumer directed healthcare within our free marketplace be a better option. To answer the question on socialized medicine, all we need to do is look to our neighbors to the North.

Canada's publicly-financed health insurance system is gradually breaking down, and public hospitals are sending growing numbers of patients they are too busy to treat to private hospitals, says the New York Times.

- Private clinics are opening around the country by an estimated one a week, and private insurance companies will soon find a gold mine.

- Private doctors across the country continue treating patients, assuming provincial governments will not try to stop them only to face a test case in the Supreme Court.

Prime Minister Stephen Harper and other politicians remain reluctant to openly propose sweeping changes, even though government costs are exploding and some cancer patients are waiting months for diagnostic tests and treatment. They claim private doctors drain the public system of doctors and nurses. Yet, most Canadians agree the current wait times for healthcare are not acceptable, says the Times. Furthermore:

- Canada remains the only industrialized country that outlaws privately financed purchases of core medical services.

- The prohibition on obtaining private health insurance is not constitutional where the public system fails to deliver reasonable services.

Socialized medicine is a system which just does not work. We need to promote consumer directed health insurance and health savings accounts to let free market forces fix our healthcare system. Socialized medicine is not the answer!

Visit us today and find out more about Health Savings Accounts and how they can help you: http://www.health--savings--accounts.com

Posted by Wiley Long at 09:04 AM | Comments (1)

March 13, 2006

Tax break on Health Savings Accounts proposed in Georgia

State legislators in GA are considering a tax break on health plans that could save businesses millions and encourage Georgians to take more control over their health-care spending.

House Bill 1254 will encourage people to purchase high-deductible health insurance plans that qualify for a health savings account. The bill would make HSA plans exempt from premium taxes at the state, county and municipal level.

The bill was introduced by Rep. Tom Knox, a Republican from Cumming. He believe HSAs are one of the most effective ways to reduce the cost of health care because they put the actual purchaser of health care in control of the funds.

HSAs have been touted for years as one possible remedy for out-of-control health costs because they allow people to use pre-tax dollars to pay for their health care and they give people a stake in their own health-care spending.

But HSAs are still being met with reluctance by employees who don't want to ditch their current health plans because they're afraid they can't afford the high deductible or they don't understand how the plans work.

In Atlanta and across the South, only about 1 percent of people who got insurance through their employer actually chose a consumer-driven health plan in 2005, according to an annual survey by Mercer Health & Benefits LLC.

Knox hopes the bill will make health plans with HSAs affordable for more people, including some who are uninsured, while also encouraging insurance companies to offer more of these plans.

The bill has some powerful sponsors, including Jerry Keen, a Republican from St. Simons Island who is House majority leader, and Earl Ehrhart a Republican from Powder Springs who is chairman of the House Rules Committee.

Georgia Insurance Commissioner John Oxendine says HSAs could help put the brakes on escalating health-care costs.

"I very strongly believe that with health care we've got to get the American family more involved," Oxendine said. "We need to give families incentives where they buy into the health insurance process so they have a financial incentive to oversee the utilization of the insurance."

Oxendine says people need to learn to think about health insurance as they do other types of insurance, such as homeowner's or auto coverage, in order to reduce the overuse of health care.

"If your window breaks, you don't use your homeowner's insurance, you fix the window," Oxendine said.

"What a Health Savings Account does is it lets us start thinking about health insurance more like this. People think, 'Do I really need to go to the doctor, do I need to get that test?'"

Insurers support the measure, saying it would be an important incentive for consumers.

"To the extent that we can put more HSAs in the hands of consumers, that's a great thing," said Kirkland McGhee, executive director of the Georgia Association of Health Plans. "It's the right thing to do and has lots of benefit to consumers."

Proponents of the measure are confident that insurers, who actually pay the premium taxes, would pass the tax savings on to consumers. But some health experts question that assumption.

Regina E. Herzlinger of Harvard Business School, who is a national expert on consumer-driven health care, said the tax break could be a "dubious mechanism."

"It's better than nothing, but it's not as good as giving the incentive directly to consumers," said Herzlinger, who has written numerous books and articles on consumerism in health care. "If you want to induce purchase of HSAs, you should give the tax inducement directly to the consumer, not to the insurer. If you give it to the insurer, what is the guarantee that they will pass it on to the consumer?"

Herzlinger says that if insurers do in fact pass the savings on to consumers, the bill could boost sales of HSAs.

"Now, if the consumer does get it, would that be an effective incentive? You betcha," said Herzlinger, who is the Nancy R. McPherson professor of business administration.

Knox points out that consumers already get a direct tax break because they purchase HSAs with pre-tax dollars. He sees the proposed legislation as a second layer of tax incentives for consumers.

Herzlinger supports more consumer education and consumer choice in health care, and says that HSAs offer a more affordable option of health care for many people. She estimates that plans with an HSA are 5 percent to 40 percent cheaper for the consumer, depending on the degree of competition in individual states.

Steve Davis, managing editor of Inside Consumer-Directed Care, says consumers show an increasing interest in HSAs and that there already are about $1 billion in assets in HSAs across the nation.

For example, San Francisco-based Wells Fargo & Co. (NYSE: WFC) is selling an average of 5,000 new HSAs a month, according to research published in the February edition of Inside Consumer-Directed Care. There are about 300 to 400 financial institutions offering HSAs, Davis said.

Experts agree that incentives on HSAs alone aren't enough to reform the health-care system. They say that true consumer-driven health care includes not only HSAs and high-deductible health plans, but also a hefty dose of education, wellness programs and price transparency.

"What we're really talking about is a whole different mind-set in terms of having people stop and think about what they want from their health care and also understand that part of it is their own responsibility."

You can find extensive HSA Information at HSA for America.

Posted by Wiley Long at 08:08 AM | Comments (2)

March 07, 2006

Ohio expands use of Health Savings Accounts

Ohio's House of Representatives have been working on efforts to expand the use of Health Savings Accounts. House Bill 46 sponsored by state Representative Tim Schaffer, R-Lancaster, expands the authority to offer Health Savings Accounts to local governments in the state. This could lead to significant savings for municipalities, townships and counties. The measure passed out of the House on Jan. 31 and now is being considered by the Senate Health, Human Services and Aging Committee.

Moreover, on Feb. 2, House Bill 506 was introduced. The bill, sponsored by state Rep. Louis Blessing, R-Cincinnati, would require HSAs to be offered to all public employees in Ohio. If passed, the bill has the potential to save both state and local government’s money on health insurance premiums.

The expansion of Health Savings Accounts and health care cost savings requires a breadth of good information. With that in mind, they have worked to ensure that Ohio’s consumers have increased access to health care information. House Bill 197, sponsored by state Rep. Jim Raussen, R-Springdale, allows consumers access to increased health care information. Consumers will be able to become more involved in managing their health care because information regarding price and performance will be more readily available. This information will be compiled by the Ohio Department of Health and Ohioans will be able to compare data by using their public Web site: www.odh.state.oh.us. House Bill 197 passed out of the House on Feb. 14 and is now being debated in the Senate.

Last spring, House Bill 193 was introduced. It's legislation dealing with group life insurance which was passed by the House and then signed by the governor of Ohio last August. H.B. 193 provides for the operation of Health Savings Accounts in a manner consistent with federal law.

Find more HSA Government Information.

Posted by Wiley Long at 09:06 AM | Comments (0)

March 06, 2006

AARP not opposed to Health Savings Accounts

The American Association of Retired Persons (AARP) played a significant role in helping Democrats win last year’s fight over Social Security private accounts, but the influential group is not expected to play a role in the upcoming debate on President Bush’s proposal to expand Health Savings Accounts.

Democrats have been relentless in their criticisms of health savings accounts (HSAs) and Bush’s whole agenda for healthcare. In particular, some lawmakers and their allies have compared the expansion of private accounts for healthcare to the White House’s plan to create private accounts under Social Security.

AARP is not officially opposed to Health Savings Accounts, but they are not in favor of expanding their tax incentives. However, the group does not plan to campaign against the White House HSA proposals.

AARP’s decision not to oppose Bush strongly on Health Savings Accounts will put Democrats in a difficult spot.

Health Savings Account legislation is expected to pass the House, attracting some Democratic support. It’s unclear how many Democrats will back it, but it is clear that Health Savings Accounts do not unite Democrats the way Social Security reform did.

Senate action on such legislation will be more difficult, particularly given the opposition of Finance Committee ranking member Max Baucus (D-Mont.). Baucus was instrumental in helping put together the Medicare drug bill, which was meant to be the crowning achievement of Bush’s domestic-policy legacy.

Baucus’s resistance will make it difficult for Chairman Chuck Grassley (R-Iowa) to move a bill out of the committee.

Special interests are aligning for the Health Savings Account debate along predictable lines. For example, large employers and health-insurance companies are behind the president’s agenda, while labor unions and some consumer groups stand opposed.

The White House wants to create new tax breaks for people who open the tax-free accounts and buy the high-deductible health insurance plans that go along with them. The president has made HSAs a regular fixture in his speeches this year.

AARP spent $27.8 million on lobbying during the first half of 2005, when Social Security was its No. 1 issue. The group also mobilized its massive grassroots operation against Social Security private accounts.

“We don’t have any such campaign in mind right now for Health Savings Accounts,” Certner said. “This is clearly not at the level” of Social Security.

AARP does not view HSAs as a direct threat to Medicare. Proponents of the HSA expansion have not proposed using Medicare funding for the accounts or making them part of the program itself, as the Social Security plan would have done.

Unlike the immediate negative reactions of many older Americans to the president’s Social Security reform ideas, seniors so far are not worried about HSAs. In fact, HSAs stand to benefit seniors who open the accounts before they turn 65.

HSAs are inextricably linked to Medicare, legislatively and philosophically, because they were created as part of the 2003 Medicare reform bill that also established the prescription-drug benefit.

The accounts are viewed as part of a movement away from open-ended entitlement spending and toward the president’s “ownership society.”

The enthusiasm of lawmakers for the White House agenda and the strong denunciations of Democratic opponents in part stems from the importance of rising healthcare costs as a vital issue for middle-class voters.

HSAs are poised to be the sole legislative vehicle for healthcare this year, making them the only handy focal point for a broader debate. The White House and its GOP allies need to appear active on healthcare, which traditionally has been an issue that favors Democrats.

The winner of the rhetorical battle may prove the winner of the legislative battle, as the public remains largely unaware of HSAs.

After Bush touted HSAs during his State of the Union address, a Kaiser Family Foundation poll found that 45 percent of people had never heard of them. Thirty-nine percent of respondents could not identify what HSAs were when presented with three descriptions; 38 percent chose the correct definition.

These numbers will begin to increase as more and more american's become aware of the many benefits of Health Savings Accounts.

Posted by Wiley Long at 08:20 AM | Comments (0)

March 03, 2006

Can Health Savings Accounts help Medicaid?

Medicaid is the federal-state program that provides health insurance, long-term care, and other health care services to about 52 million poor, disabled, and senior Americans. For the first time since Congress passed it in 1965, Medicaid has become more costly than Medicare and is the largest budget item in nearly half the states.

Can Health Savings Accounts help the Medicaid program?

For at least some of the Medicaid population, the answer is yes, but the savings will likely be relatively small given the size and scope of the Medicaid program. The problem with the Medicaid program is that people have little incentive to be prudent shoppers of medical services. A Medicaid Health Savings Account plan could change those incentives and save the program money over the long term.

Iowa and Florida have already incorporated Health Savings Accounts into their Medicaid programs, and South Carolina is trying [as of January 2006].

What's the solutions?

States should consider adding an HSA to their Medicaid program. The state could continue to be the insurer, but increase the deductible, depositing part or all of the savings in the Medicaid beneficiary's HSA. Or, the state could simply provide a defined contribution to a private-sector insurer or third-party administrator selling HSA plans.

Would this approach be a radical departure from traditional Medicaid programs? Yes, but Medicaid needs radical change in order to sustain the program. Some considerations when designing an HSA Medicaid plan:

1.What should happen to the HSA balances once a Medicaid beneficiary leaves the program?

2. Can states use methods such as electronic benefit transfer (EBT) cards to protect against misuse of the account as they do with their food stamp programs?

3. Should a Medicaid HSA program be implemented as a limited demonstration project to test and evaluate it (as Florida has done)?

4. Since HSA plans already include a financial incentive to use the funds wisely, would frequently used state cost-control restrictions, such as prescription drug lists and formularies that limit patient choice, also be imposed on the Medicaid HSA population?

The Medicaid program is in desperate need of a fix. Health Savings Accounts may not solve all the problems of Medicaid, but they can certainly help change the mindset of individuals in the program.

This is a solution lawmakers should seriously consider.

Posted by Wiley Long at 10:46 AM | Comments (0)

March 02, 2006

Health Savings Account, Minimum Wage Compromise

Two deeply partisan issues, the president's expansion of tax-advantaged health savings accounts and Democrats' wishes to boost the minimum wage, could merge into a summer compromise, according to sources on both sides. While there is no public endorsement of any deal, administration and congressional Democratic officials said they might be open to discussing a deal in which the president would win much of what he wants for health savings accounts in return for an increase in the minimum wage.

"We have a real opportunity to get some of the health savings account expansion passed," said a Republican strategist. And to do that, the strategist said that the administration may be open to reconsidering its historic opposition to any rise in the minimum wage. In fact, the strategist said that some moderates facing a tough re-election this fall might want to look friendly to a wage boost, and, if they can also get a victory on health savings account expansions, it would be even better.

"Nothing is in the works now, but it is a compromise that would work," said an administration insider.

This would obviously be great new for health savings account holders and the entire healthcare system.

Posted by Wiley Long at 07:49 AM | Comments (0)

February 25, 2006

Treasury Chief Says Health Savings Accounts Are Working

The Bush administration continues to tout Health Savings Accounts as a means of reducing healthcare costs.

Last week, Treasury Secretary John Snow visited Associated Material Handling Industried (AMHI), which will be offering Health Savings Accounts as a health-coverage option to their employees beginning this summer.

"With the addition of a Health Savings Account to your health coverage options, AMHI is joining large and small employers across America who are choosing to offer this affordable option to their employees," Snow said.

"I think it's a great option to have because choosing an HSA over traditional insurance plans puts patients in charge of their health-care purchasing decisions. That's why the creation of HSAs was so important. It was historic, really, because it embraces a philosophy that favors the individual, versus an employer or the government."

President Bush has proposed an expansion of HSAs by making premium costs deductible from income and payroll taxes when purchased by individuals, raising the cap on the amount of money that can be saved in an HSA, and making the high-deductible insurance plan that accompanies an HSA fully portable.

"HSAs are a good product. They're working," Snow said. "Savvy employers are offering them to their employees, and they are opening up an affordable option to small employers that might not have been able to afford health insurance otherwise. I'm thrilled that the employees of AMHI are going to have the option of a medical savings plan soon, and I hope that in the near future all Americans have a chance to start HSAs that have all the tax benefits of traditional health insurance."

President Bush is also touting HSAs as he visits with employers across the country. Last week, Bush praised HSAs at Wendy's International headquarters in Dublin , Ohio .

HSAs are tax-exempt trusts or custodial accounts established exclusively to pay qualified medical expenses. To be eligible for HSAs, individuals must be covered by a high deductible health plan.

Critics say HSAs will make the healthcare system weaker because they will attract young and healthy workers and drive up the costs for others and alter the shared-risk dynamic.

Bush and Snow say HSAs are a more affordable option than traditional health plans.

"HSAs are a good product. They're working," Snow said. "Savvy employers are offering them to their employees, and they are opening up an affordable option to small employers that might not have been able to afford health insurance otherwise."

Posted by Wiley Long at 10:38 AM | Comments (0)

February 24, 2006

Federal Employees should switch to a Health Savings Account

The open season to choose a new health insurance plan is over for the year, and most federal employees chose not to switch to a Health Savings Account.

But advisers say if federal employees do a better job tracking their out-of-pocket spending over the course of this year, review previous years’ experiences and compare ppo plans with health savings account plans, they will come out ahead financially by switching to a health savings account.

Look at the coming months as a chance to arm yourself with the data necessary to make an informed choice next time. You might be surprised by what you find, said Jay Savan, health and welfare group leader for Towers Perrin in St. Louis, a human resources consulting firm.

For example, although it might not seem logical at first, one way for some to reduce expenses on health care might be to enroll in a high-deductible insurance plan with a health savings account.

High-deductible health plans were developed in part to encourage people to restrain spending, such as through fewer doctor visits. They also should encourage use of in-network providers, a major way of holding down out-of-pocket costs in most plans of all types.

Employees in 2006 had a choice of 21 such plans, including three available nationwide, through the Federal Employees Health Benefits Program. The Office of Personnel Management is seeking legislation that would allow its largest insurer — Blue Cross and Blue Shield — to offer such a plan.

The tax advantages of an HSA and the fact that the government contributes to it are the major reasons these types of plans appeal to many, said Savan. His company provides employee benefit services to public and private plans.

“Truly it’s free money,” he said. “It makes a lot of economic sense.”

A happy customer

Dave Conway, a GS-14 at the National Counterterrorism Center in McLean, Va., couldn’t agree more.

For the second year, Conway is in Aetna’s high-deductible health plan with a health savings account.

He pays less in premiums than he used to under a different type of plan, and the money in his account for paying medical expenses is pretax and earns interest. If the balance is at least $2,000, he can invest it in various funds, thereby earning gains but also subject to losses.

Conway based his decision to enroll in Aetna’s high-deductible plan with a health savings account on his family’s past spending patterns. Comparing plans, even with ups and downs in health care needs over the years, “I was coming out much better with the high-deductible plan, the bottom line was looking much better,” said Conway, who is married and has two children, 19 and 16.

“Even in a year with braces, I can handle that,” he said.

Conway does not have to meet a deductible for in-network preventive medical and dental care, which is free to him under the plan. For sick visits and other nonpreventive care, Aetna pays 90 percent for in-network providers and 70 percent for out-of-network providers, but only after Conway meets the $5,000 annual deductible for family coverage. Before meeting the deductible, he would pay for the whole office visit. He can use money from his health savings account to do that, but does not have to.

He also must pay the full cost of prescriptions until he meets his deductible, and he must use money from his account for pharmacy benefits. After the deductible is met, he would shell out a co-pay for prescription drugs.

Conway thinks he won’t likely need to pay the entire $5,000 deductible, but if he or a family member requires unexpected high-cost care, he doesn’t mind the risk that he will have to pay a relatively high amount initially, and then be covered by traditional co-insurance after that.

For family coverage, the out-of-pocket maximum per calendar year is $8,000 for in-network care and $10,000 for out-of-network care.

Besides, Conway knows he can switch coverage each year if he wants to.

Conway said he was attracted to the health savings account as an alternative to his tax-free flexible spending account, which required guessing how much money to deposit and left open the possibility of losing any unused money.

“I hate gambling,” Conway said. “I was annoyed by the whole concept that I had to gamble.” Flexible spending accounts are available to all federal employees, regardless of which type of health plan they choose. Employees decide how much in pretax dollars to deposit into flexible spending accounts. The money can then be spent on certain health care expenses.

But flexible spending accounts are different from health savings accounts, in that FSA money does not carry over into future years and does not accrue interest. With HSAs, the employee owns the money forever, even if he switches health plans or leaves government service. And even when the employee dies, money in the HSA would go to a beneficiary.

People cannot have both an HSA and an FSA.

Health savings accounts also are different from health reimbursement arrangements, or HRAs. HRAs are for people ineligible for HSAs, such as those who have Medicare. HRAs do not earn interest, and are forfeited if you leave federal service or switch plans.

Conway views his health savings account as similar to an individual retirement account.

“This is like an IRA for medical use except I don’t have to wait until I retire to use it,” he said. “I like the control, not having to guess about things. I can add money.”

As with other health plans, Conway’s agency automatically deducts his share of his premium from his paycheck, and sends it plus the government’s share to the insurance company. Aetna keeps a portion, and deposits a portion into his account — $250 a month or $3,000 a year for family coverage. The $3,000 exceeds what he pays in premiums by $768.

He can, but is not required to, contribute up to $2,000 more tax free into his health savings account — the difference between the $3,000 that Aetna will deposit for him and his $5,000 deductible. Additional contributions he makes are deductible on his federal taxes.

“I can spend this money on these bills instead of my hard-earned after-tax dollars,” Conway said.

He hopes not to have to deplete his account, but let it grow because he knows he will have higher medical costs someday.

A new way of thinking

HSA plans can benefit both people who have low and high claims, depending on the plan design, its alternatives, the premiums and personal circumstances, Savan said.

But they’re not for everyone. And some high-deductible plans are better than others, Savan said.Quality care and satisfaction with your plan are important too.

Savan said you should not always pay for health care with account money because “HSAs are the most powerful tax-protected accumulation vehicle in the Internal Revenue Code.”

You have to think about health care and insurance in a new way, as owning your house versus renting it, he said. When you own, you build up equity and have control.

Retirees generally are not enrolling in federal high-deductible plans, according to a January Government Accountability Office report, “FEHBP, First-Year Experience with High-Deductible Health Plans and Health Savings Accounts.” In 2005, only 11 percent of enrollees in high-deductible plans were retirees, compared with 45 percent in all of FEHBP, GAO said.

The average age of those in high-deductible plans is 46, compared with 59 for all of FEHBP.

That is what critics are afraid of. As high-deductible plans attract younger, relatively more healthy customers, critics say fee-for-service plans will lose customers and be forced to raise rates or go out of business because of higher costs associated with older enrollees.

OPM said in its response to the GAO report that it would monitor “the possibility of risk selection occurring over time by enticing the young and healthy into [high-deductible health] plans at the expense of our traditional insurance plans.”

Posted by Wiley Long at 11:21 AM | Comments (0)

February 17, 2006

Iowa State Senate proposes more tax help for Health Savings Accounts

Republicans in the state senate want taxpayers to help foot the bill for Iowans who open Health Savings Accounts and rack up big doctor bills. Senator Ron Wieck, a Republican from Sioux City who is an insurance agent, believes one reason Iowans aren't opening Health Savings Accounts is because they worry how they'd cover a big deductible before they've deposited enough money in their health savings account.

Wieck proposes that Iowa taxpayers loan up to 10-million dollars a year to Iowans who start up a Health Savings Account and then don't yet have enough money to cover a big medical expense. Wieck says the Iowan would have up to 12 months to repay the loan to the state.

Wieck says higher deductibles are a wave of the future, and will hopefully cause people to think twice before racking up unnecessary medical expenses. "We all need to adjust our thinking on our insurance," Wieck says. As Iowans face ever-higher deductibles in order to get affordable health insurance, Wieck says it makes sense to encourage Iowans to open Health Savings Accounts that can be used to cover those deductibles.

Wieck says banks and insurance companies will probably "work harder" to educate Iowans about Health Savings Accounts if the State of Iowa sets up the revolving loan fund to help pay medical costs in the first months a person has a Health Savings Account with just a small balance.

Posted by Wiley Long at 10:38 AM | Comments (0)

February 13, 2006

Without Health Savings Accounts, we're Dead Meat

Ever since the State of the Union Address, there has been a lot of negative press on Health Savings Accounts. It seems there is a full on attack on Health Savings Accounts accusing them of being for the rich, just another tax shelter, a cancer to the healthcare system. Nothing could be further from the truth. These are the same people who think your government should be in control of your healthcare. They want to give you free healthcare, but at a cost. What's the cost? They tell you when, where, and how you will get treatment. They (the government) are in total control of YOUR body.

So what would this system be like? All we have to do is look to the North to find out. Canada already has this type of healthcare system in place. The reality of health care under Canada's socialized medical system: Canadians wait ... and wait ... and wait. ... And sometimes they die while waiting for free government health care.

To see a short film on Canada's healthcare system, I urge you to visit: http://www.onthefencefilms.com/video/deadmeat/

The film is called Dead Meat. It's a 25 minute short film which shows the reality of health care under Canada's socialized medical system.

The U.S. health care system is in need of reform, however, the solution proposed by those opposed to Health Savings Accounts is a total government takeover of medicine inspired by the Canadian government-run health care system. Since most Americans know very little about medicine as practiced by our northern neighbor, this film is a warning to look before you leap. Many Americans would be surprised to know that Canada (like Cuba and North Korea) makes it illegal to purchase private healthcare for yourself or a loved one - and that the adoption of a so-called "single-payer" system would represent a major restriction of the freedoms that Americans now enjoy.

Canada does spends less on health care than the U.S. However, costs are controlled by arbitrarily limiting the number and availability of doctors, specialists, operating room hours, high-tech equipment, diagnostic tests, drugs and expensive treatments. In short, the government limits the supply of health care in order to hold costs down. The result: shortages, rationing, and long wait lists.

Many Canadians who have never been really sick are supportive of their system. In fact, the system caters to the healthy majority with free primary care doctor appointments, flu shots, etc. while depriving the truly sick - often the elderly - of timely medical treatment that is often more expensive. Political expediency dictates that health care dollars are spent where the votes are: the healthy majority - while across Canada, hundreds of thousands of sick and disabled people quietly languish in pain in their homes on long waiting lists for treatment while being told that to question the moral supremacy of their health care system is somehow "Un-Canadian".

Is this really the type of system we want restricting us here in the United States? Not me! I believe Health Savings Accounts are the answer. Put people in charge of their own health and healthcare dollars. Let the people decide what's best for them... not our government.

Posted by Wiley Long at 09:18 AM | Comments (0)

February 09, 2006

President Bush Calls for Price Transparency

Yesterday, President Bush spoke in New Hampshire about his 2007 Budget proposal. Here is a portion of the discussing he had on Price Transparency which will benefit all Health Savings Account owners:

"I've talked about health care and the importance for us to have a health care system that takes care of the elderly and the poor, but a health care system that strengthens the relationship between doctor and patient; a health care system that provides transparency into pricing; a health care system that uses information technology to bring the medical profession into the 21st century.

You know, some are going to say, what do you mean by that? Well, I mean, when you're writing your files by hand, it means you're not in the 21st century. And since most doctors can't write too well, there's a lot of information that didn't pass.

I've talked, as well, about the need to get legal reform in the medical industry. Look, we've got too many lawsuits, pure and simple. We've got a real problem in the country because docs and hospitals are getting sued. A lot of good docs are being driven out of business. I said an appalling -- a statistic that I think is appalling in my State of the Union. Do you realize there are 1,500 counties in America without an OB/GYN? And that's wrong. And one of the reasons that's happening is because there's too many lawsuits driving good docs out of practice. We need a medical liability system that is fair to medical providers in the United States of America.

When I first went to Washington, I thought it might be a state issue. And then I realized that all these lawsuits are causing doctors to practice defensive medicine, as well as running up premiums, which costs the federal government a lot of money. And so I've decided this is a national issue that requires a national response. And the United States Senate needs to be pass medical liability reform this year.

Part of our plan for a patient-doctor system, one that gives you choices to make and counts on you for making rational choices, is to expand health savings accounts, and make sure that individuals and small business employees can buy insurance with the same tax advantages that people working for big businesses now get. And we're going to make sure those health savings accounts are portable. One of the things about our economy, which is interesting, is that there's a lot of turnover when it comes to jobs. People are changing jobs a lot, which creates uncertainty. And one way to deal with that uncertainty, to bring certainty to people in the workforce, is to make sure they can carry their health savings account with them from job to job, so they don't fear losing their health insurance.

So I've got a lot of ideas on health care that I'm going to be talking to the nation about in the coming weeks."

We are very encouraged with the path to health care reform the president is taking. With help from Congress, health savings accounts can be a viable options for anyone. We urge you to write your congressman to support the presidents initiatives.

Posted by Wiley Long at 09:37 AM | Comments (1)

February 08, 2006

Bush's Health Savings Account Push

In President Bush's state of the union, he mentioned the importance of Health Savings Accounts in solving some of the nation's healthcare problems, but he didn't take the time to get into his health savings account details. Here are his five proposals:

1. Give Individuals That Purchase HSAs On Their Own The Same Tax Advantages As Those With Employer-Sponsored Insurance. Currently, companies that purchase group coverage for their employee's are allowed to write off that expense on their taxes. But individuals are not. The President proposes making premiums for HSA-compatible insurance policies deductible from income taxes when purchased by individuals outside of work. In addition, an income tax credit would offset payroll taxes paid on premiums paid for their Health Savings Account insurance policies.

2. Eliminate All Taxes On Out-Of-Pocket Spending Through HSAs. This would allow people with HSA plans to make contributions to their account to cover all out of pocket expenses, not just their deductible. This proposal would in effect raise the contribution limit.

3. Enable Portable HSA Insurance Policies. This would enable employers to offer their employees a portable HSA insurance policy. Currently, the only way to do that is for the employees to have individual coverage instead of a group plan. Portability would allow someone to change jobs without worrying about losing their health insurance.

4. Extend The Benefits Of HSAs To Low-Income Families And Individuals Through Refundable Tax Credits. A family of four making $25,000 or less would be able to get a refundable tax credit of $3,000 from the Federal government to help buy an HSA-compatible policy that covers them for major medical expenses.

5. Allow Employers To Make Higher Contributions To The HSAs Of Chronically Ill Employees. Under current law, employers must contribute the same amount to each employee's HSA. This proposal would help chronically ill people pay for their expenses with pre-tax dollars.

These suggestions, though modest, would continue to push consumer-driven healthcare into the mainstream. The key ingredient then to really making it all happen is price transparency. We will cover price transparency in greater detail in future posts.

Posted by Wiley Long at 09:42 AM | Comments (0)

February 06, 2006

Changes to accelerate Health Savings Account growth

As President Bush moves to encourage growth in health savings accounts, more consumers may soon have to decide whether a Health Savings Account is the right option.

Mr. Bush is seeking a number of changes -- outlined in his State of the Union address last week -- meant to make Health Savings Accounts more appealing. Among them:

- Significantly increasing the amount of money people can deposit in their accounts each year.

- Offer tax incentives to people who get an HSA on their own, rather than through employee benefits.

If these changes, which are expected to be part of his budget proposal next week, are enacted, they have the potential to accelerate HSA growth.

HSAs, tax-advantaged savings accounts meant to help consumers pay for health care, were greeted with some skepticism when they were introduced in 2003. The accounts are the centerpiece of a movement to give consumers more of a stake in health-care spending. The hope is that people will make wiser, price-conscious choices.

Critics contend that HSAs will lead consumers to forgo necessary medical care, because they are paired with high-deductible insurance that requires people to pay more for care out of pocket. These critics contend people aren't smart enough to make their own decision on their healthcare. They feel the government is better suited to make those kinds of decisions for you. I would rather make my own decisions.

Employers are increasingly offering their employees HSA-qualified health insurance -- and the opportunity to open an HSA account. Overall, 8% of companies with 10,000-19,999 workers provided HSA benefits in 2005, compared with 1% in 2004, according to Mercer Health & Benefits, a unit of Mercer Human Resource Consulting.

About three million people have the high-deductible insurance that qualifies them to open an HSA, up from about one million last March, according to America's Health Insurance Plans, an insurance trade group. It's unclear how many people have actually opened the HSAs meant to go with these policies, but it is recommended that you set up your HSA as soon as you get your health savings plan. The sooner you set up your HSA, the more you will be able to save in taxes.

Please visit our HSA Questions & Answers page for some common questions and things to keep in mind if you are considering an HSA.

Posted by Wiley Long at 09:49 AM | Comments (0)

February 01, 2006

Bush touts Health Savings Accounts as the future of Healthcare

In his State of the Union address, President Bush talked about Health Savings Accounts and his priorities for confronting the rising cost of health care. He is looking to help people afford the health insurance they need, and make the coverage portable so people don't lose their health plan when they change jobs. Health Savings Accounts, which now cover over 3 million people, are already lowering people's costs, in many cases are totally portable, and provide powerful incentives that will reduce healthcare costs for all.

For the past 60 years, most health care has been paid for and controlled by third parties such as the government, insurers, and employers. Consumers rarely compared prices or quality of service when shopping for health care – partly because this comparison was usually very difficult or even impossible, and partly because the price often just didn't matter to the consumer, who was only responsible for a moderate co-payment.

Today people are waking up to the idea that they should look at their health insurance the way they look at their automobile insurance or homeowners insurance. The coverage is to pay for the major expenses, not the routine oil changes. Because HSAs require that the insured cover the first $1000 or more in health expenses, there is incentive for the consumer to demand information about health care pricing. This puts market pressure on the providers, and is the beginning of dramatic change in the system.

The most exciting thing about HSAs is this potential impact they could have on the cost of health care. 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 Health Savings Account 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. As an epidemic of diabetes and other obesity-related diseases loom over us, it is nice to see the government setting up a system that rewards healthy behavior.

Health savings accounts have the potential to be a powerful force of change in the healthcare 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 11:39 AM | Comments (0)

January 31, 2006

Congressman Chris Cannon predicts Health Savings Accounts will revolutionize Healthcare

U.S. Rep. Chris Cannon said his priorities for a hopeful sixth term involve the same issues as when he first claimed Utah's 3rd District seat in 1997: health care, school trust lands and telecommunications.

Noting his past role in establishing health savings accounts, Cannon expects the near future will present Congress with revolutionary issues in the healthcare industry.

"This year is truly going to be a transformation in medicine," he said last Thursday at his campaign kickoff luncheon in Provo. "It's going to change the way you deal with your doctor."

He is working on legislation to encourage the sharing of medical technology and breakthroughs to help save more lives, and he also has supported appropriations for medical research. Cannon, who lost a daughter to a rare cancer, also is a member of the House cancer caucus.

Another pet cause is telecommunications. He favors legislation that will spur Internet growth and increase access, as well as keep e-commerce free to consumers.

We applaud the work congressman Cannon is doing with Health Savings Accounts. Hopefully his sixth term will help create even more advantages for Health Savings Account holders.

Posted by Wiley Long at 08:17 AM | Comments (0)

January 30, 2006

Bush to focus on Health Savings Accounts

The White House has been dropping hints that the president will make health-care reform the centerpiece of his State of the Union address. Michael F. Cannon, director of health policy studies at the Cato Institute, has written the following health policy "wish list" for the State of the Union:

- Propose "large health savings accounts (HSAs)." Federal tax laws encourage workers to surrender control over their health care to their employer. Among other things, that means that most people lose their health insurance when they leave a job.

- Push hard for interstate commerce in health insurance. A big reason that health insurance is so expensive is over-regulation by the states and the fact that each state forbids you to buy insurance from carriers in another state. The Congressional Budget Office estimates some state regulations increase insurance premiums by as much as 15 percent.

- Avoid further expansions of federal power. The president should explain that markets will deliver conveniences like electronic medical records and price and quality information just as soon as government stops monkeying with market incentives. And he should explain that expanding federal power at the expense of states is improper, because it limits individual freedom and the states' ability to experiment.

- Clean up the Medicare mess. It would be nice for the president to acknowledge that the Medicare drug program that took effect this month was a huge mistake. Though the intent was to expand coverage, so far the program has caused many to lose the coverage they had, including some of the poorest and sickest seniors.

The Bush administration's health care record so far has been inconsistent, says Cannon. It's high time for the administration to straighten up and fly right by removing government influence over the health care sector.

With the use of health savings accounts, the president has a chance to do just that.

Posted by Wiley Long at 09:24 AM | Comments (0)

January 27, 2006

Encourage adoption of Health Savings Accounts, don't 'Outlaw' them

Health insurance costs have been increasing far faster than the rate of inflation for a number of years now. More and more employers are finding they can no longer afford to offer health insurance to their employees or are forced to raise employee contributions to the point where the insurance is not affordable, especially for lower-paid workers.

At HSA for America, we strongly disagree with a letter written by Richard C. Oehling published Dec. 21 (http://independent.gmnews.com/news/2005/1221/Letters/025.html) warning against the dangers of a medical savings plan.

Health savings accounts (HSAs) are similar in structure to all other forms of property and casualty insurance normally purchased by individuals. Homeowners and auto insurance require the policyholder to cover minor expenses out of pocket until the deductible is reached after which the insurance covers all eligible costs. There is no reason why consumers should not pay for routing health costs out of pocket as well, even without a tax incentive. Traditional health coverage with a low — or even no — deductible is an accident of history that originated as a way to get around World War II-era wage controls. With so little out-of-pocket exposure, the system invites overuse and insensitivity to the cost of care.

In any given year, only a small percentage of the population incurs significant medical expenses. United Healthcare — which insures 29 million people nationwide — says in the most recent year, only 7 percent of its policyholders accounted for 63 percent of its claims costs. In the Medicare program, the sickest 5 percent of the beneficiaries account for 50 percent of the cost in a typical year.

Critics argue health savings accounts will only appeal to the healthy and the wealthy. However, the early experience with HSAs suggests otherwise. Besides, due to the unpredictability of life, one could be perfectly health today but have a heart attack or be diagnosed with cancer next month or be in a serious car accident or suffer an injury while participating in sports.

For the insurance industry, the potential for cost savings in enormous if millions of small claims for routine office visits and minor tests could be eliminated from their claims handling organizations. Cost saving is what makes it possible to offer a much lower premium for protection against catastrophic illness and more serious medical events. For hospitals, if more people had low-cost catastrophic insurance instead of no insurance at all, their bad debt and uncompensated care cost would be much lower than it is now.

We find it hard to imagine any intelligent person who felt sick would not go to the doctor because they did not want to pay $100 (or less) for an office visit out of pocket. Do they avoid changing the oil in their car because they have to pay for it out of pocket? Of course not. One thing clearly required for this system to work however, is vastly improved pricing transparency. If consumers are going to pay for medical costs themselves until the deductible is reached, they need to be assured they are paying at the insurance company negotiated contract rate and not the artificially high full list price.

Mr. Oehling makes it sound as though the choice is between health savings accounts (or MSAs) and traditional medical coverage with low deductibles. In the private sector however, where companies have to compete, make a profit, and are subject to the discipline of the marketplace, the choice is often between high deductible health insurance and no coverage at all. We understand the federal government cannot go out of business no matter how expensive and inefficient it is, but that is not the way the rest of the economy works.

Health savings accounts — coupled with pricing transparency from hospitals, surgical centers, imaging centers, labs, physicians and other medical providers — have enormous potential to bring down medical inflation by injecting competition into the system and making consumers more price and cost sensitive. We should do everything we can to encourage their adoption, not try to outlaw them.

Posted by Wiley Long at 10:30 AM | Comments (0)

January 23, 2006

Bush Speech to Focus on Health Savings Plans

If it's your money, you spend it more wisely. That is the idea behind the health care system that President Bush wants to create with a series of initiatives in his State of the Union address. Health Savings Accounts will be at the center of those initiatives.

The American people are very, very frustrated with the health care system, for good reason," Al Hubbard, the chairman of Bush's National Economic Council, said Wednesday in an interview.

Health insurance premiums are rising faster than inflation. The number of employers offering health coverage is dropping. The ranks of the uninsured are growing. These developments explain why health care is near the top of many Americans' list of worries.

Taming health care costs and energy prices will be priorities for Bush this year, Hubbard said.

With most of Congress up for re-election in November voting that could end Republican control on Capitol Hill, Bush hopes to shift from the polarizing war in Iraq and divisive domestic issues and help his party at the ballot box.

Democrats say the president is undertaking a campaign to transfer much of the cost of health care to the consumer, which discourages people — particularly the poor — from seeking care they need.

Hubbard and other administration officials, echoing hints Bush has provided in recent speeches, sketched the outlines of the president's health care agenda to be presented in the Jan. 31 address. Most is a repeat of previous proposals that stalled in Congress or expansions of earlier measures that passed:

- Raising the dollar amount allowed to accumulate in existing health savings accounts. In these accounts, people shoulder more of the responsibility for the costs of care. They deposit money tax-free into a dedicated account while purchasing a high-deductible health savings plan to cover catastrophic expenses.

- Additional tax breaks to help people who do not have employer-provided insurance coverage buy their own.

- More portability for health insurance when people switch jobs.

- A way for people to get more information about the price of the care they get and the performance of the doctors they see.

- A switch from paper medical records to more cost-effective, error-reducing electronic records.

- The ability for small businesses to pool the purchasing of health insurance coverage across state lines.

- A cap on malpractice verdicts other than actual economic damages, something Bush has been able to get through the House three years in a row, but not the Senate.

Democrats are challenging Bush's intentions and point to the billions of dollars in proposed cuts to Medicaid, the government health program for the poor and disabled, that would allow states to increase fees on beneficiaries.

Democrats also say that focusing on providing tax advantages to individuals for a health savings account draws the healthiest and wealthiest out of traditional employer-based insurance. Left behind, they say, are the sick and the less well-off in a system that is increasingly expensive and thus eventually less available.

Hubbard said Bush's proposals arise from a belief that controlling health care costs requires choices to be driven more directly by a price-conscious, informed patient-shopper than by employers, insurers and others. The hope is that consumer demands will then drive the market into providing better and cheaper services.

"All we're doing is trying to give consumers the opportunity to be engaged in the process with a HSA plan," he said.

"It's unfair to treat people who don't have employer-provided insurance differently (in the tax code) from those who do have employer-provided insurance," Hubbard said.

"It's not fair for people who feel like they can't leave their job or they'd lose their insurance. And it's not fair not to know what the quality of the providers are and what kind of pricing they're being charged for services," Hubbard said.

Bush has run into big problems with his domestic priorities:

- His proposal to add private accounts in a major remake of Social Security, intended to be his focus in 2005, was shelved after an aggressive sales campaign yielded little support, even among Republicans.

- An effort to simplify tax laws, already pushed into 2006 by the Social Security drive, has been postponed again until 2007 to avoid a potentially explosive debate in an election year.

- Bush's desire to see a foreign guest worker program and other immigration changes is mired by divisions within his party.

Let's hope President Bush's initiatives for health savings accounts and consumer-directed health care fare better than his social security and tax break initiatives. American's deserve better than the current healthcare system.

Find more HSA Information at HSA for America.

Posted by Wiley Long at 10:02 AM | Comments (5)

January 21, 2006

California needs Health Savings Accounts not socialized medicine

Greg Aghazarian is the lead Republican on the Assembly Health Committee in California and a proponent of Health Savings Accounts. Here's what he had to say in an article published Jan 19th, 2006:

As the lead Republican on the Assembly Health Committee, I have had the opportunity to work closely with my colleagues on many proposals to improve California's health care system.

I follow a simple principle: California has the best doctors and scientists in the world, and there's no reason we shouldn't have the best medical care. We must focus on keeping up with the changing times in California while ensuring quality health services are delivered to hard-working families.

One proposal that would do this is Assembly Bill 661, by Republican Assemblyman George Plescia, of La Jolla. This common-sense bill (and its counterpart, Senate Bill 173 by Republican Senator Abel Maldonado, of San Luis Obispo) would make health care more affordable to workers by creating Health Savings Accounts. Such plans would encourage California's workers to save money for medical expenses on a tax-free basis. This bill would conform to existing Federal Health Savings Account laws and would make it easier for people to prepare their income taxes.

Not only would workers have the option to save for health care expenses, but employers would have the ability to contribute to Health Savings Accounts on behalf of their employees - a low-cost benefit that many employers would embrace. It's a win-win situation for all Californians.

The way I see it, any vehicle that encourages savings for health care is a step in the right direction, and a reminder that each of us is responsible for our basic needs and those of our family.

John C. Goodman, president of the National Center for Policy Analysis, wrote in his "Health Savings Accounts Will Revolutionize American Health Care," that the concept of HSAs "is not conservative or liberal. It's an empowerment idea." Goodman also said that Health Savings Accounts should "appeal to everyone who suspects that impersonal bureaucracies care less about us than we care about ourselves."

An impersonal bureaucracy is exactly what we would have to deal with if socialized medicine were to become the law of the land in California, as one lawmaker has proposed.

Senate Bill 840, by Sen. Sheila Kuehl, D-Santa Monica, would create a single-payer health care plan, in other words government-run health care coverage for everybody. The money to run such a plan would come from the already-drained pockets of taxpayers.

Proponents say this plan is necessary to correct California's fragmented health care system and deliver health care to all citizens.

I agree our system is not the well-oiled machine we want it to be, nor is it in the state of ruin depicted by Kuehl and her allies. Changes are necessary to keep up with the state's ever-changing population, but a single-payer health care plan would not serve as a magic cure-all for our health care problems.

In fact, such a drastic transformation of one of California's biggest economic forces would actually create a health care disaster.

First, socialized medicine would do nothing more than create a monopoly by the government. Without the incentives created by competition, a single-payer system would likely give us a system with all the innovation, compassion and efficiency of the Department of Motor Vehicles.

Look at the state of health care in Canada, England, New Zealand and much of Europe - all countries that offer single-payer health care - where waiting for months on end is part of the "health care for all" deal.

In fact, 25 percent of patients undergoing elective surgery in those countries are forced to wait more than four months before they see the lights of the operating room according to the Fraser Institute, a Vancouver think tank. The average Canadian patient waits more than eight weeks to see a specialist and another nine weeks before getting treated.

In Quebec, the waiting game is so excessive that 10,000 breast cancer patients sued 12 hospitals for causing them to wait eight weeks for radiation therapy.

You would think after being put on hold for weeks and months on end, the patients in these countries would at least receive top-notch care. Think again. The average U.S. doctor sees about 2,000 patients a year, while the average Canadian doctor squeezes in close to 3,100 patients. Quality care is not what overworked, exhausted doctors deliver to ailing patients.

I am confident my colleagues will see SB 840 as an unwarranted measure that would have ruinous effects on the state's health care system. I am hopeful they will vote in favor of responsible legislation such as AB 661 that will arm California families with tools like health savings accounts to make medical plans more attainable and affordable.

We couldn't agree more with Assemblyman Aghazarian. Let's hope the rest of his colleagues are smart enough to see the dangerous effects of Socialized Medicine and in turn support the use of Health Savings Accounts to help the California healthcare system. You can find detailed HSA information at HSA for America

Posted by Wiley Long at 11:12 AM | Comments (0)

January 15, 2006

Health Savings Account Legislation Pending on Capitol Hill

A Health Savings Account can be a good way to improve a family’s healthcare without busting the budget. Some in Congress want to encourage greater use of this financial tool and there is a proposal on the table to create new ways for families to use Health Savings Accounts. House Speaker Dennis Hastert says Health Savings Accounts allow people to offset their health insurance deductibles by putting pre-tax money into interest bearing or investment accounts, save money and improve healthcare.

“I felt that people had to have ownership of their insurance policies. So they could have real portability, so they could have something they could make decisions on where to go to get health care and something that they had in their own pockets, that somebody else, a third party, wasn’t making those decisions all the time.”

And that’s why Virginia Congressman Eric Cantor is trying to expand the use of Health Savings Accounts through new legislation.

“The idea behind what we are trying to do is to allow the employees the same level of benefit that they get under their current healthcare insurance structure. The difference will come in the fact that they will own this account. It will be their money; the incentive will be for long-term savings in healthcare, not short-term spending.”

Dr. Dave Stevens of the Christian Medical Association calls Health Savings Accounts an excellent resource for families.

“It decreases bureaucracy, decreases filing, lets you make decisions on what you want to spend your money on, what’s reasonable and what’s not. And by doing that, people keep their health care costs down.”

The legislation will add more types of health care savings accounts. With members of congress supporting HSA Plans, Health Savings Accounts will continue to grow.

Posted by Wiley Long at 09:49 AM | Comments (0)

January 07, 2006

Government proposal for Health Savings Accounts will reduce Uninsured

The Bush administration is considering a proposal to that would boost Health Savings Accounts. It would give a refundable tax credit to those under age 65 to purchase high deductible health insurance HSA plan with a Health Savings Account. According to the University of Minnesota, the plan would reduce the number of uninsured in America.

Author Roger Feldman and his colleagues examined the effect of three simulations: a refundable tax credit of up to 90 percent of insurance premiums, a 75 percent HSA subsidy for low-income individuals, and a full subsidy for those unemployed, regardless of income. The results:

- Bush's tax credit proposal would reduce the number of uninsured by 10.7 percent at a cost of about $8.1 billion; it would also increase the number of people who turn down employer-sponsored insurance, but would only affect 1 percent of the employer-offered market.

- The buy-in subsidy would reduce the number of uninsured by 16.5 percent, at a cost of about $10.8 billion for those who are uninsured, and $1.4 billion for those who turn down employer-sponsored health insurance.

- A full subsidy would reduce number of uninsured by 47 percent, however, it would cost an estimated $52.3 billion for those previously uninsured, and $16.9 billion for those who turn down employer-sponsored health insurance.

- A full subsidy for the unemployed would prevent the erosion of the employer-sponsored health insurance market and would reduce the number of uninsured even more than the Bush administration's proposal, but it would cost more -- about $11.2 billion.

In conclusion, the Bush administration's tax credit proposal would double individual Health Savings Account take-up and reduce the number of uninsured by about 2.9 million people, at a cost of about $8.1 billion annually.

Posted by Wiley Long at 10:39 AM | Comments (0)

January 05, 2006

Congress to look at ways to make Health Savings Accounts more attractive

Congress next year will consider ways to make health savings accounts more attractive.

A Health Savings Account is a tax-free account that individuals can use to pay medical costs. It must be combined with a high deductible health insurance plan.

More than 1 million people now are covered by HSA-eligible health insurance plans, many of them offered through employers. That number will "skyrocket in 2006," says Scott Serota, president and CEO of the Blue Cross and Blue Shield Association.

The Blues plan to open a bank to serve customers with HSAs and other consumer-directed health plans. This bank will "make managing health care easier than managing checking accounts," Serota says.

The American Bankers Association and the American Bankers Insurance Association just launched the HSA Council, which will address technological and regulatory issues facing banks in the Health Savings Account market.

Business groups plan to lobby Congress for additional tax breaks for HSAs, including giving small businesses a tax credit for the first $500 employer contribution to a family policy and the first $200 contribution to an individual policy.

Refundable tax credits for the uninsured and a tax deduction for high-deductible health insurance premiums also would make HSAs more affordable, according to the U.S. Chamber of Commerce.

Another bill aims to make HSAs more attractive to employees at larger businesses, which are accustomed to richer benefits than employees of small businesses.

The legislation, introduced by Rep. Eric Cantor, R-Va., would allow employers to coordinate HSAs with flexible spending accounts and health reimbursement arrangements. It also would increase contribution limits to HSAs.

Cantor says HSAs "are the cornerstone of health care reform" because they "put consumers in the driver's seat."

Current HSA enrollees are more cost-conscious, but they also are more likely to avoid or delay needed care, according to a recent survey conducted by the Employee Benefit Research Institute and the Commonwealth Fund. HSA enrollees also are less satisfied with their health plan than people with traditional insurance, the survey found.

Posted by Wiley Long at 10:34 AM | Comments (0)

January 03, 2006

Study shows Health Savings Accounts can help the Uninsured

The first academic research on Health Savings Accounts has just been published in the November/December issue of Health Affairs, a publication respected by many within the health policy establishment who often have been naysayers regarding the potential of consumer-directed health care and Health Savings Accounts. Here's what they found...

Until recently, much of the data available on HSAs have come from individual carriers, conservative think tanks, and trade associations. HSA skeptics have doubted their figures - that between 33 percent and 40 percent of those purchasing HSAs were previously uninsured.

Widespread Acceptance

The Health Affairs report, "Health Savings Accounts: Early Estimates of National Take-Up," by Roger Feldman, Stephen T. Parente, Jean Abraham, Jon B. Christianson, and Ruth Taylor, reviews the relative merits and potential of various proposals to expand HSA affordability for the uninsured. Even the most basic statements made by these University of Minnesota researchers are likely to make waves in certain circles.

For example, the authors find "widespread national adoption of individual Health Savings Account plans is possible" and "early indications are that they are a viable alternative to existing plans like traditional PPO and other lower deductible plans."

The Minnesota team performed sophisticated forecasting simulations of the extent to which several different policy proposals - including President George W. Bush's health care tax credit for HSAs - would:

- reduce the number of uninsured;

- reach the low-income uninsured; and

- cause people receiving employer-subsidized group coverage to drop it and move to the individual market (presumably for a better deal).

'Doughnut Hole' Looms

The study found a health care tax credit would lower the number of uninsured by 10 percent. Coauthor Feldman's baseline for the number of uninsured excluded those who had access to some form of coverage, including full-time college students, people enrolled in public health programs, and those who had the option to be covered though a spouse's policy. That brought the baseline number of uninsured to 27 million people. Under the president's health care tax credit, Feldman says in the report, 2.9 million people would gain coverage.

According to the study, even more people would be likely to obtain HSA coverage with a health care tax credit if the authors had assumed lower deductibles. For their simulations, they assumed a plan requiring a $3,500 deductible for a single person and a $7,000 deductible for a family. Those deductible amounts are far higher than what is required by current HSA law, which is $1,000 for a single and $2,500 for a family.

The president's health care tax credit does help people meet their deductible by making a contribution to their HSA account (as well as helping with their monthly premium costs). But that assistance is nowhere near enough to cover these assumed deductibles. That means there is a "doughnut hole" - a gap in coverage that must be met by the individual or family.

Under Feldman's assumptions, a single person would have $1,000 in his or her HSA account. But with a $3,500 deductible, he or she ends up with a $2,500 "doughnut hole." For families, the exposure is even greater, with $2,000 in an HSA account but a $7,000 deductible, producing a $5,000 hole to be filled with family resources.

Cost-Effectiveness of Tax Credit

Clearly, those numbers would give pause to many people, particularly when Americans are so used to modest deductibles and first-dollar coverage. For uninsured folks who have modest resources, those numbers are downright scary.

For an HSA health care tax credit to make a greater dent in the uninsured population, less out-of-pocket exposure would be needed. The authors affirm that in their article, even while noting the cost to taxpayers then increases as well.

At a cost to the government of $2,761 per year per person covered, the health care tax credit is one of the more cost-effective proposals Feldman and his coauthors studied. The study also found the health care tax credit proposal is the least disruptive to the group market, keeping Uncle Sam from subsidizing people who already have private coverage.

A health care tax credit would gain its take-up from those who most need it, the study found, with at least 40 percent of the newly covered coming from the bottom 25 percent of income brackets and a full 75 percent from the bottom half.

Government Role Increasing

Currently, Congress finds itself in tight budget constraints, but doing nothing won't save federal dollars, because taxpayers will end up footing the bill for the uninsured through federal programs that pay for uncompensated care at hospitals, as well as through higher Medicaid and SCHIP costs.

In just one year, from 2004 to 2005, the percentage of people covered by government health insurance programs rose from 26.6 percent to 27.2 percent. According to a November study by The Heritage Foundation, over the next five years the cost of Medicaid is projected to increase by 41 percent.

Hence it would be wise to divert some of that enormous build-up toward plans with greater effectiveness and lower cost, such as health care tax credits. According to Feldman's study, Congress could create a viable five-year health care tax credit demonstration program helping three million people per year that would cost $8 million a year, or $40 million for the five-year program.

"The academic community finally is coming around to see that HSAs, in conjunction with refundable tax credits, could dramatically reduce the number of uninsured," said Grace-Marie Turner, president of the Galen Institute. "It will be very hard for opponents of HSAs to ignore this study in the top health policy journal. This is an important breakthrough."

Learn more about HSA Government information and find out what Health Savings Accounts can do for you.

Posted by Wiley Long at 11:47 AM | Comments (0)

December 14, 2005

Health Savings Coalition Signals Support for Plan on Health Savings Account Expansion

The Coalition on Health Savings Account Coordination -- a group of employers and health plans with the common goal of improving health savings accounts and health care consumerism in general -- applauded the introduction of the "Flex HSAs Act."

Joining Rep. Cantor and House Speaker Dennis Hastert today was Carla Bender, a 12-year employee of Medtronic, Inc., who opened her health reimbursement arrangement (HRA) in 2002, and now saves approximately $1,000 per year in lower premiums. Carla echoed the intent of the Cantor bill by saying, "I'm glad I had the opportunity to choose how to manage my own health care, and the changes proposed in this bill will provide a further incentive for employees like me to do the same."

Early studies show that, while HSAs have enjoyed high adoption rates among the uninsured and small businesses, there seems to be a lag in adoption among employees of medium-to-large companies. For example, IBM has less than 2% of its employees enrolled in an Health Savings plan for 2005, with annual enrollment numbers for 2006 yet to be published.

Under current law, HSA contributions are limited to the amount of the deductible or the out of pocket limit, whichever is less. Also, individuals are not allowed to use flexible spending accounts or health reimbursement arrangements to pay for their out of pocket costs. The Cantor legislation will promote greater adoption of HSAs by lifting the "lesser of the deductible" limitation and allowing coordination of HSAs with flexible spending accounts and health reimbursement arrangements.

Comments from Coalition Members

Deere & Company

"The cost of health care continues to be a major concern for workers in the U.S. and the companies that they work for. Employees want assurance that they will have access to affordable health care," said Mert Hornbuckle, Vice President of Human Resources at Deere & Company. "We join today with other large employers in strong support of Congressman Cantor's HSA coordination legislation. HSAs will provide employees an opportunity to better manage their own cost of health care services and to save for unpredictable medical costs in the future."

Medtronic, Inc.

"HSAs and HRAs are working and gaining participation and acceptance with each year's enrollment," said Dave Ness, V. P. Global Rewards, Medtronic, Inc. "However, if they are to become the mainstream method of financing health care, we need to have more flexibility in determining plan design, contribution levels along with the ability to coordinate more between the two."

UnitedHealth Group

"In our work with an increasing number of large employers who are sponsoring more consumer-centric health plan designs such as HSAs, Definity Health supports initiatives that advance flexibility which ultimately encourage consumers to be more active in how their health care dollars are spent," said Kyle Rolfing, CEO of Definity Health. "We applaud Congressman Cantor's legislation which enables employers to provide their employees with optimal benefit options to address their health care needs in a meaningful way."

National Association of Manufacturers

"We commend and congratulate Rep. Cantor for continuing to work to improve access to Health Savings Accounts (HSAs)," said Neil Trautwein, National Association of Manufacturers Assistant Vice President for Human Resources Policy. "The only constant in benefit design is in its constant evolution. Rep. Cantor's bill will be a big part of building tomorrow's better HSA."

CIGNA HealthCare

"While today's HRA and HSA plan designs continue to evolve, the goal of these plans -- to enable consumers to have greater ownership of their health care decisions -- hasn't changed," said Michael Showalter, Vice President of Consumerism for CIGNA HealthCare. "The Cantor Flex HSA is an important step that will help consumers use these plans with greater flexibility, and allow companies like CIGNA HealthCare more opportunities for innovation in plan design to support the varying needs of today's employers and consumers."

America's Health Insurance Plans (AHIP)

"Our members welcome Congressman Cantor's leadership in working to improve access to health insurance," said Karen Ignagni, AHIP President and CEO. "This legislation will help expand insurance options for millions of Americans by allowing them to increase savings for health care expenses that might occur in the future and to integrate existing tax incentives and create a better system for consumers."

Background on Coalition

The Coalition on HSA Coordination was created in 2005 to examine the issues underlying the expansion and strengthening of HSAs. Recognizing the positive impact of HSAs on small businesses and the uninsured, the Coalition pairs the experience and leadership of many of America's medium-to-large employers and explores the potential for coordinating an employee's HSA with other consumer-driven health plans.

The goal of coordination is simple: to provide a full continuum of coverage through consumer-driven health plans such as Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs). By allowing the employee to coordinate these accounts, he or she can reduce their total annual costs, saving both the employee and employer from double-digit increases in monthly premiums.

Posted by Wiley Long at 03:07 PM | Comments (0)

December 08, 2005

Congress Got Something Right with Health Savings Accounts

Health savings accounts (HSA) allow people to purchase a relatively inexpensive, high-deductible insurance and deposit money into a tax-free account. In effect, they give Americans more control of their own health care, says Dr. David Gratzer, a physician and a senior fellow at the Manhattan Institute.

This is the second anniversary of the legislation that created the Health Savings Account, the Medicare Modernization Act of 2003, so it's worth celebrating HSAs -- and considering what needs to be done to make them better...

Gratzer recommends:

- Allowing individuals to deduct from their taxes the premiums of high deductible health insurance when purchasing an HSA. Not only would this be fair -- it corrects the historic bias toward employer-based insurance -- it would make HSAs even more attractive.

- Passing Rep. John Shadegg's Health Care Choice Act, which would allow out-of-state purchase of health insurance. Modeled after interstate banking laws, this legislation would create a national market for health insurance.

- Making HSAs available to public employees. Despite the dire financial condition of most public plans, only the federal government and Arkansas offer HSAs.

- Allowing individuals and companies to allocate a certain amount, pre-tax, into health care to be used for premiums or health accounts, or both. Insurance companies will then design products with different mixes of health accounts and insurance.

Americans have cause to celebrate the first two years of HSAs. But with these steps, the third anniversary could be even bigger, says Gratzer.

Posted by Wiley Long at 11:08 AM | Comments (0)

November 21, 2005

House GOP may alter Medicaid to include Health Savings Accounts

Republican members of the House of Delegates signaled Sunday that they will pursue reforms in the coming year to the sprawling health insurance bureaucracy that serves indigent, disabled and elderly Virginians.

The delegates made no final decisions on specific Medicaid overhauls, but Republican leaders signaled a strong interest in health savings accounts.

Under that system, Medicaid recipients would receive dollars to purchase high deductible health insurance or catastrophic-only plans. Additional money would be placed in a separate account for routine health care, and the recipient would decide how best to spend those funds. The annual amount available to each individual could vary based on income, age or medical history.

Virginia would need permission to adopt such a plan from the federal government, which helps fund Medicaid. Florida and South Carolina have already gotten permission to experiment with health care accounts.

“We’ve got a broken system, and we need to fix it,” said House Speaker William J. Howell, R-Stafford. “You’ve got more and more people eligible that are not necessarily using their services in the most efficient, most economical way, and we just need to redesign the whole system.”

For example, Howell said, too many Medicaid recipients depend on emergency rooms for routine health care even though it is the most costly way to receive treatment.

Del. Phillip A. Hamilton, R-Newport News, the leader of a task force that will develop the new legislation, sounded a more cautious note, saying he does not believe the state’s health care system is fraught with waste.

“We have a well-managed Medicaid program but there’s nothing wrong with modernizing it, seeing if there are some better ways to be more efficient and more effective,” Hamilton said.

Hamilton said his group also is considering measures that would expand the number of recipients under managed care programs and create an electronic reimbursement system to speed up payments to doctors who treat Medicaid patients.

Hamilton said he hopes to have final recommendations before Christmas.

Posted by Wiley Long at 05:52 PM | Comments (0)

November 06, 2005

Employer Sponsored Health Insurance or Health Savings Accounts

An advisory commission appointed by the president to examine tax reform issued its report this past week. One of the things they addressed was employer-sponsored health insurance. Currently, employers and the self-employed get a 100% tax write-off for the premiums they pay for health insurance. No one else does.

This tax break is the largest that the federal government provides, estimated to amount to $141 billion in 2006. Because of this tax advantage, employers are more likely to provide increased benefits and reduce the amount they pay in wages. The panel estimated that an across-the-board tax cute of approximately 14% could be funded if this tax break, offered to just certain individuals and corporations, were eliminated.

Their recommendations, however, are not that harsh. They suggest that individuals should be able to write off $5000 for health insurance costs, and families should be allowed up to $11,500 write off for health insurance expenses. This would be whether they get their health insurance from their employer, or buy it on their own.

This would of course be a much fairer system than the current one, and would have the added benefit of encouraging individuals to own their own health insurance (that they could take with them if they changed jobs), rather than being tied to an employer-sponsored plan.

It will be interesting to watch the politicians fight this one out.

Find out about the High Deductible Health Insurance advantage at HSA for America

Posted by Wiley Long at 04:17 PM | Comments (0)

November 04, 2005

Health Savings Account Contributions in 2006

The IRS has issued the official maximum contribution levels for health savings accounts in 2006. For taxpayers with self-only coverage, the maximum 2006 contribution is $2,700; for family coverage, the maximum is $5,450.

The maximum annual out-of-pocket amounts for HDHP self-coverage has increased to $5,250 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $10,500. For 2006, the minimum deductible for HDHPs increases to $1,050 for self-only coverage and $2,100 for family coverage.

Here is the Treasury's press release:

October 28, 2005
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Indexed Amounts for Health Savings Accounts

The Treasury Department and IRS today issued new guidance on the maximum contribution levels for Health Savings Accounts (HSAs) and out-of-pocket spending limits for high deductible Health Plans (HDHPs) that must be used in conjunction with HSAs. These amounts have been indexed for cost-of-living adjustments for 2006 and are included in Revenue Procedure 200r-70, which announces changes in several indexed amounts for purposes of the federal income tax.

The new levels are as follows:

New Annual Contribution Levels for HSAs:

- For 2006, the maximum annual HSA contribution for an eligible individual with self-only coverage is $2,700. (Note: for any individual, the maximum contribution is the lesser of the indexed amount or the deductible of the HDHP.)

- For family coverage the maximum HSA contribution is $5,450.

- Catch up contribution for individual who are 55 or older is increased by statute to $700 for 2006.

- Both the HSA contribution and catch up contribution apply pro rate based on the number of months of the year a taxpayer is an eligible individual.

New Amounts for Out-of-Pocket Spending on HSA-Compatible HDHPs:

- The maximum annual out-of-pocket amounts for HDHP self-coverage increase to $5,250 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $10,500.

Minimum Deductible Amounts for HSA-Compatible HDHPs:

- For 2006, the minimum deductible for HDHPs increases to $1,050 for self-only coverage and $2,100 for family coverage.

Note that a fiscal year HDHP that satisfies the requirements for an HSA-compatible HDHP on the first day of its fiscal year may apply that deductible for the entire fiscal year.

Complete Health Savings Account information can be found at HSA for America

Posted by Wiley Long at 10:09 AM | Comments (0)

October 28, 2005

Tax Reform Panel looks at Health Insurance Benefits

A bipartisan tax reform panel, appointed by President Bush, is exploring ways to make the tax code simpler, fairer, and more geared toward promoting economic growth. One of the things they are looking at is health insurance benefits.

Currently, employees receive these benefits tax-free, yet if an employee buys health insurance on his own, he does not get a tax-deduction. This tax benefit disproportionately benefits high-income workers (48% of the benefits go to those earning $75,000 or more).

The panel may recommend curbing the amount of tax-free health insurance contributions employers can make, and/or give a tax deduction to those workers paying their own premiums.

Loosening the bond between employer and health insurance is a positive thing. In today's mobile economy, most people would be much better off owning their own health insurance, so that if they leave an employer they don't risk losing their coverage. Tax changes that make taxation of health insurance fair to all is a positive thing.

Find more information on health insurance and Health Savings Accounts at HSA for America.

Posted by Wiley Long at 12:14 PM | Comments (0)

October 26, 2005

Lawsuit helps Health Savings Account owners

In the first decision of its kind in the country, Circuit Court Judge Richard Baldwin certified a class action lawsuit filed on behalf of thousands of uninsured health insurance patients of Legacy Health System ("Legacy"). The lawsuit accuses Legacy of consistently overcharging its poorest and most vulnerable patients -- the uninsured -- by billing them the highest rates without their knowledge. The uninsured as well as Health Savings Account holders stand to benefit from this lawsuit.

The prices these hospitals charge the uninsured far exceed the amount they require the insured patients to pay for the same exact services.

This is a common practice all across the country. Hospitals have an “official” price that almost no one (other than the uninsured) pays. They then give “discounts” to all insurance companies. The person who is paying for healthcare out of their own pocket is thus screwed.

The lawsuit is filed Multnomah County Circuit Court of Oregon and is part of nationwide litigation against nonprofit hospitals for price gouging and price discrimination against the uninsured commenced by Richard Scruggs and attorneys around the country in June 2004.

Hopefully, the end result will be honest and transparent pricing by hospitals, allowing consumers to compare rates and make informed decisions about where to obtain their medical care.

Learn more about Health Savings Accounts at HSA for America

Posted by Wiley Long at 09:32 AM | Comments (0)

October 22, 2005

Medicaid Health Opportunity Accounts

Last week Senator Mike Crapo of Idaho and Representative Mike Rogers of Michigan introduced bills that would allow Medicaid recipients to set up “Health Opportunity Accounts” (HOAs), which would be similar to a Health Savings Account (HSA). States would be allowed to contribute up to $2,500 per adult and $1,000 per child to these accounts, and receive federal matching funds for the accounts.

The Medicaid recipients with HOA accounts can then use them for health care expenses. The legislation, entitled the Medicaid Health Opportunity Account Act of 2005, is a step in the right direction. As I often talk about in this blog, giving people the power to make their own healthcare decisions, with their own money, will not only benefit them, but it will increase competition, and lower prices for all healthcare consumers.

You can find more Health Savings Account information at HSA for America.

Posted by Wiley Long at 11:15 AM | Comments (0)

October 18, 2005

New Health Savings Account Spanish-language brochure

U.S. Treasurer Anna Escobedo Cabral spoke to the California Hispanic Chamber of Commerce in Oakland last month about the release of a new Spanish-language brochure to help Spanish speakers better understand how Health Savings Accounts (HSA) work. Since 30% of Hispanics are currently uninsured, Health Savings Account plans may provide a much more affordable option, and enable more uninsured to gain coverage.

The Spanish-language HSA brochure can be downloaded free of charge from the U.S. Treasury Web site at: http://www.treasury.gov/offices/public-affairs/hsa/pdf/hsa_tri-fold_brochure_es.pdf.

View more HSA Information at HSA for America.

Posted by Wiley Long at 10:29 AM | Comments (1)

October 16, 2005

California continues to tax Health Savings Account contributions

California senators recently decided to continue taxing Health Savings Account (HSA) contributions (report). California is one of only five states that continue to tax HSA contributions. All of the other states have conformed to federal law, allowing a 100% tax deduction for any contributions to Health Savings Accounts. Because over 40% of all HSA owners appear to have been uninsured before buying their HSA policy, these plans provide a powerful way to reduce the number of uninsured.

California, along with Alabama, Maine, Massachusetts, and Wisconsin, should get with the program.

Find more HSA State Income Tax information at HSA for America

Posted by Wiley Long at 04:42 PM | Comments (0)

October 14, 2005

Hospital Price Reporting and Disclosure Act

Last week U.S. Senators Jim DeMint (R-S.C.), Richard Durbin (D-Ill.), and John Cornyn (R-Texas) introduced the “Hospital Price Reporting and Disclosure Act,” bipartisan legislation requiring hospitals to disclose their charges for the most common procedures and drugs administered in an inpatient setting.

“Consumers seeking routine hospital services need to know what they’re paying so they can make educated decisions,” said Senator DeMint. “This bill provides a simple mechanism for hospitals to disclose their prices.”

Specifically, the legislation would require hospitals to regularly report to the Secretary of U.S. Department of Health and Human Services (HHS) the amount they charge for the twenty-five most commonly performed inpatient procedures, the twenty-five most common outpatient procedures, and the fifty most frequently administered medications. The Department would then post this information on the Internet for easy access.

“Americans need access to reliable information about hospital prices in order to make responsible decisions about their healthcare,” said Senator Cornyn. “This legislation aims to give Americans that information in a user friendly format. That’s an important step in the right direction towards empowering consumers to make informed healthcare decisions for their families.”

Hospital charges vary significantly based on facility and procedure. Some hospitals charge just $120 for a chest x-ray while others charge more than $1,500.

“The worst part about price discrepancies is that consumers often have no idea what the cost is from the beginning,” said Senator DeMint. “No other industry expects consumers to commit to buying before they know the true cost. This will make hospitals more accountable to patients. Patients should have access to price information before they commit to a procedure. Information is power, and this bill is an important step in empowering Americans with the tools to be smart consumers.”

On June 30, 2005, a companion bill was introduced in the U.S. House of Representatives (H.R. 3139) by U.S. Reps. Bob Inglis (R-S.C.) and Dan Lipinski (D-Ill.).

These are positive moves, which will force hospitals and other healthcare providers to finally compete in a free market.

Find more Health Savings Account inforamation at HSA for America

Posted by Wiley Long at 10:29 AM | Comments (0)

October 03, 2005

Guaranteed Issue laws not conductive to Health Savings Accounts

Guaranteed Issue laws allow people to wait until they are sick before buying health insurance, and any insurance company doing business in the state cannot deny them coverage. This naturally has the effect of raising premiums and is not conductive to Health Savings Accounts (HSAs). Can you imagine how much automobile insurance would cost if you could wait until you have an accident before you buy the insurance?

Only five states still have this ridiculous law — Maine, Massachusetts, New Jersey, New York, and Vermont. None of them have any insurance companies that offer HSA plans to individuals, simply because the risk to the insurance company is too high.

State legislatures should of course repeal these laws, but at the very least they should make an exception for Health Savings Accounts. This would make health insurance much more affordable, and would likely have a large effect on reducing the number of uninsured.

Posted by Wiley Long at 09:31 AM | Comments (3)

September 01, 2005

CA Insurance Commissioner's Flawed Criticisms of Health Savings Accounts

CA Insurance Commissioner John Garamendi's report criticizing Health Savings Accounts (HSAs) has a lot of his opinions, but many are not backed by solid research.

For instance, he says "Financial disincentives are likely to cause many to forgo necessary treatment at early stages." However, McKinsey & Co., a management consulting firm, found that patients enrolled in consumer-directed plans are more likely to pay attention to prevention and wellness, and were 30% more likely to get an annual physical.

The complete McKinsey report can be seen at www.mckinsey.com/clientservice/payorprovider/Health_Plan_Report.pdf. HSA consumers know that if they catch a problem early, they'll save money in the long run.

Garamendi's report also makes the mistake of thinking that HSAs are making health insurance less affordable to the uninsured. In fact, the opposite is what is happening. Fully 37% of those purchasing HSAs are people who previously had no health insurance. About two-thirds of our customers at HSA for America are paying less than $100 per month for their HSA plans. Most are choosing plans that cover 100% of hospitalization, doctors' visits, lab tests, emergency room visits, and prescription drugs after the deductible is met.

Fans of one-payer socialized medicine plans are against HSAs mostly because they realize that once millions of Americans have these plans, it will be politically impossible to force them to change to a government plan.

Find more Health Savings Account inforamation at HSA for America

Posted by Wiley Long at 12:21 PM | Comments (0)

August 28, 2005

Health Savings Accounts Now Available in Pennsylvania

Pennsylvania has been one of only a handful of states in which Health Savings Accounts (HSAs) have not been available. Pennsylvania's problem is that state law mandated certain first-dollar benefits be covered by all health insurance sold in the state. HSA plans are designed to protect against major expenses, while letting the consumer cover smaller expenses like doctor visits and prescription drug expenses incurred before meeting the deductible.

Governor Rendell recently signed a bill exempting high-deductible health plans with HSAs from this mandate. Unfortunately for Pennsylvanians, the state still does not allow deductions on state income taxes for deposits into a Health Savings Account.

One of the major benefits of Health Savings Accounts is that the deposits are 100% tax deductible from federal income taxes, and from state income taxes in all but nine states. The Pennsylvania legislature will reportedly be revisiting this issue in 2006.

Posted by Wiley Long at 01:10 PM | Comments (0)

August 23, 2005

Health Insurance for everyone in California using Health Savings Accounts (HSAs)

Jack Lewin, CEO of the California Medical Association and Ronald A. Williams, president of the Aetna insurance company, suggest a different solution for California’s health insurance challenges – requiring all citizens to carry health insurance.

Currently, people without health coverage often don’t get any preventive care, and only seek emergency care after medical conditions become acute. Health care facilities then have the absorb the uncompensated cost of services to these individuals, and then shift the cost to those who have insurance. The result is higher insurance premiums, and possibly even more people without coverage.

Before someone is allowed to drive a car in this country, the car must be insured. This is to prevent that individual from imposing expenses that are theirs (such as damage they do by causing a vehicle accident) onto others. Requiring individuals to carry health insurance would have similar benefits.

- By requiring individual coverage by those who can afford it, people would become personally responsible for their own health and healthcare expenses.

- Subsidies for those who cannot afford the most basic coverage acknowledges the social responsibility society has.

- A properly structured plan that encourages consumerism (such as Health Savings Accounts do) would not only provide access to health care but would also do much to ease the financial crisis facing health care.

These suggestions would be fair to all, would allow more Americans to benefit from the private-sector health care that most Americans receive through their employers, and would be much more cost-effective than any government-run socialized system.

Source: Jack Lewin and Ronald A. Williams, "Cover Yourself!" Wall Street Journal, August 19, 2005.

Find more Health Savings Account inforamation at HSA for America

Posted by Wiley Long at 11:08 AM | Comments (0)

August 21, 2005

California's Misguided Insurance Commissioner on Health Savings Accounts

California Insurance Commissioner Garamendi opens his report criticizing Health Savings Accounts (HSAs) and other forms of consumer-driven healthcare with this statement: “This report is not a neutral presentation of facts... This report and the recommendations contained in it are my views and the opinions of those of my staff.”

Californians should be outraged that their insurance commissioner is spending millions of their tax dollars in a PR campaign to promote his biased political view, with no attempt to present a balanced report. But apparently, Mr. Garamendi sees no problem with spending your tax money. In fact, he’d love to spend much more of it.

In his report, he complains that consumers will save about $7 billion in taxes by placing tax-deferred money into Health Savings Accounts. This is money that individuals can choose to spend on their own healthcare expenses, in any way they choose. They may go to a chiropractor, or a naturopath, they can shop the market, and find the best value for the service they’re looking for. If they stay healthy, they’ll then still have that money, to spend on whatever they want.

Garamendi believes the government can spend this money “more effectively” than you can. Isn’t there a punch line to a joke that goes something like “We’re from the government, and we’re here to help”?

His report claims that HSAs will benefit only the wealthy. An individual can shelter up to $2,600 per year in a Health Savings Account. This can be a nice tax break – perhaps up to $800 or so. That may be enough to cut the cost of one’s healthcare by a third or more, but its certainly not enough to get Donald Trump and Martha Stewart rushing to put their money into HSAs.

Interestingly, in a different section he then claims that many people with HSAs “are likely to forego necessary treatment”, because of the high deductibles that these plans carry. Are these the same wealthy people he was talking about who will be the only beneficiaries of these plans?

I’ve probably got more to say about this ridiculous report. Stay tuned... and let me know if you agree.

Posted by Wiley Long at 11:25 AM | Comments (1)

August 17, 2005

Rhode Island to Finally Get Health Savings Accounts

Health Savings Accounts have, until recently, been illegal in the state of Rhode Island. Federal law defines what an HSA-qualified plan can cover before the deductible is met, and Rhode Island has many requirements on what must be covered by health insurance companies that do business in the state. One requirement – that coverage for early intervention expenses for special needs children be exempt from deductibles – conflicted with HSA legislation, and thus made HSAs unavailable to the citizens of Rhode Island.

This law has recently been changed, not only addressing this immediate problem but also exempting tax-advantaged health plans from any future mandates as well. This is great news for individuals and families who purchase their own health insurance.

Two companies have announced that they will be offering HSA plans in the state. UnitedHealthcare of New England will be offering its iPlan HSA products in Rhode Island, effective Sept. 1. Blue Cross Blue Shield of Rhode Island is planning to launch their HSA plan, tentatively named HealthMate for HSAs, by October 1. Both Blue Cross and United expect premiums for their HSA plans to be 30 to 40 percent lower than for their other plans.

This obviously has the potential to save Rhode Islanders thousands of dollars in premiums, and income taxes.

Posted by Wiley Long at 03:17 PM | Comments (5)

August 11, 2005

Tax Deductible Health Savings Account Insurance

To encourage broader use of Health Savings Accounts (HSAs), the President has proposed allowing individuals who set up HSAs to deduct from their income taxes the premiums they pay for their health insurance, thus reducing the net cost of those policies.

Currently, businesses are allowed to deduct the cost of health insurance from their income taxes. Individuals who buy their own health insurance, however, cannot deduct this expense, and must pay taxes on the entire premium. Only if an individual is self-employed are they allowed to deduct the cost of their health insurance from their taxes.

President Bush has also proposed providing a contribution of $1,000 to the HSAs of low-income families (those making at most $25,000 per year), along with a $2,000 refundable tax credit toward purchase of a high-deductible insurance policy to cover major medical expenses. This could be a great way to help low-income families protect themselves from major medical expenses, and can also be a way to reward them for staying healthy.

As with all HSAs, any money not withdrawn from the account to pay for medical expenses grows tax deferred, and can be used to pay for medical expenses tax-free at any time. If the money is not needed for medical expenses, it can be withdrawn for any reason, penalty free, after age 65. If it is withdrawn before age 65 for non-medical reasons, income taxes and a 10% penalty must be paid on the withdrawal at that time.

Posted by Wiley Long at 10:11 AM | Comments (0)

August 09, 2005

Pennsylvania decides to tax Health Savings Account contributions

The Health Savings Account (HSA) bill recently signed into law by Pennsylvania Governor Ed Rendell eliminates state tax exclusions from HSA contributions.

A majority of states give a tax deduction for contributions to Health Savings Accounts. This is in line with the federal government, which also provides federal income tax deductions for any contributions made to an HSA.

Under the original legislation, contributions to HSAs by employers and employees would not have been taxable for state income tax purposes. Unfortunately, under pressure and threat of veto from the Rendell administration, the tax exclusion language for contributions was stripped from the bill immediately prior to its passage.

The Pennsylvania Chamber of Business and Industry expressed disappointment that important state tax exclusions were eliminated from the health savings account bill signed into law by Gov. Ed Rendell. "While we note that the concerns of insurance companies have been addressed by ensuring compliance with the federal health savings account law, we are extremely disappointed that the small business community's needs were ignored," said Jim Welty, PA Chamber vice president of legislative and corporate affairs.

"The new law provides insurers assurance that Pennsylvania's law adheres to federal requirements for health savings accounts, but unlike a majority of other states, it provides virtually no tax incentive at the state level," said Welty, adding that the savings from tax-free interest that can be earned is negligible compared to tax savings that could have been realized had the contribution exemption remained in the measure.

Welty said the PA Chamber is committed to ensuring that contributions to HSAs are excluded from state income tax, as they are treated for federal tax purposes, and will make the issue a priority this fall.

By offering a tax incentive, the federal government and most states are encouraging people to take more responsibility for their health, and their healthcare decisions. As more and more people open Health Savings Accounts, the medical community will feel the impact of consumers who are now more concerned with how their healthcare dollars are spent, and who are shopping before they buy.

Governor Rendell apparently thinks citizens of Pennsylvania who open Health Savings Accounts should pay higher taxes on their contributions than the citizens of at least 42 other states do.

Posted by Wiley Long at 09:07 PM | Comments (2)

August 03, 2005

Health Savings Account Bills to be voted on by Congress

House Republican leaders this month plan to bring several health care bills to a vote. Floor action may be expected during the week of July 25 on bill HR 525, which would allow small businesses to buy health insurance through business and trade associations.

Action is also is expected on a measure sponsored by Rep. John Shadegg (R-Ariz.) that would make it easier for insurers to expand sales of health care policies into additional states. Basically, this proposal would remove the ability of states to regulate their own health insurance laws. (Once again, the Republicans show that they tend to be for states rights more when they are not the ruling party. Once they’re in power (either party, that is), they want to take control away from the states, and put it in the hands of Congress.)

The House may also consider a proposal (HR 1872) to expand health savings accounts for small businesses. This bill would make high deductible health insurance plans tax deductible for individuals. Currently businesses can deduct health insurance as a business expense, but individuals get no tax break when they purchase their own health insurance. This bill would also provide a refundable credit to businesses that help fund their employee’s health savings accounts.

Posted by Wiley Long at 09:47 AM | Comments (0)

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 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 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 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)

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 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)