5 important questions to ask about an HSA

Is an HSA plan the right choice for me?

5 QUESTIONS YOU SHOULD ASK YOURSELF!

1. Do I want to save money for current and future health expenses?HSA plans have two primary components – health insurance coverage and an actual tax-advantaged savings account. You can use the money in the savings account to pay for your current health expenses, but you also own the money in the account regardless of whether your health coverage changes or you move to another city. So, HSAs offer an opportunity to build tax-advantaged savings for current and future health expenses.

2. Which type of health plan gives me a better financial value?Do you prefer to save money on your monthly premiums in exchange for paying some of the initial costs of your health care services out of your own pocket (known as the “deductible”)? Or would you rather pay higher monthly premiums in exchange for your insurer covering a portion of your costs from day one? With HSA plans you can put the money you save on your premiums into your tax-advantaged savings account to build interest, whereas with a traditional plan, more money is spent on premiums regardless of how much health care you actually use.

3. Have I considered all the relevant costs for each plan?To make sure you’re not comparing apples to oranges, you should consider all of the cost elements associated with each plan option. Traditional plans may include: higher monthly premiums, a smaller deductible, as well as copays and/or coinsurance. HSA plans may include: lower monthly premiums and a higher deductible. So depending on your health needs, a high-deductible plan may very well cost less overall than repeatedly paying a traditional plan’s copays and coinsurance

4. Will I lose unused money in the HSA?HSAs don’t have a “use it or lose it” provision. Just as some cell phone providers now let you roll over unused minutes, HSAs let you roll over your unused dollars from one year to the next, so you don’t have to worry about ever forfeiting your money.

5. Is it difficult to connect the HSA plan with the bank account?Since you need to select a financial institution to open your savings account with, if the health insurer offering the HSA plan also has a financial institution available, it can make the process of setting up and using an HSA much easier and more convenient. Some insurers have their own bank and offer a single enrollment process so you can sign up for both the health insurance plan and the bank account at the same time, eliminating the need to go through two separate enrollment processes. Also, one way to turn HSA funds into long-term health care savings is to invest that money in mutual funds or other opportunities. So make sure that the bank you choose has investment options available.

Old article with a new(er) message

If you subscribed to Employee Benefit News back in 2006 you may have come across an article in the June issue entitled "Full replacement feat - HSA helps Wendy's grill health costs" by Leah Carlson Shepherd:

Wendy's put the kibosh on its medical inflation by offering a health savings account. The fast-food chain started offering the HSA as the only coverage option for workers last year.

Jeff Cava, Wendy's executive vice president of HR, notes, "We held premiums completely flat. That was the first time that happened in the history of the company."

Health claims costs fell by 14% from 2004 to 2005, and claims for this year are projected to be 4% less than last year. This coupled with premium savings, leads Cava to project the three-year ROI for the HSA to be 221%.

Roughly 60% of employees contributed to an HSA last year and 45% contributed this year. About 90% of HSA-users had account balances at the end of 2005, and the average balance was $600. The funds stashed in HSAs totaled $4 million. Wendy's contributes 60% of the deductible to workers' HSAs each year. Preventive care is covered before the deductible.

"I think the key here was the focus on preventive coverage,” Cava explains. “We're trying to change behavior. If it's about saving money, then you've missed the point. It has to be a sustained change in behavior that leads to a sustained improvement in health."

There is much more to this article, but since this is all that is posted on the Employee Benefit News website, you may have to dig through your old subscriptions.

What COULD Universal Health Care mean for us?

Why do we want Universal Health Care?

Sure, it sounds great. If I have to go to the doctor, the "government" (whoever that is) pays for me. We look longingly at Canada and mutter "I wish I didn't have to pay so much for my . . . back surgery, knee replacement or cancer treatment......"

Bertrand Russell said "The most savage controversies are those about matters as to which there is no good evidence either way. " - Bertrand Russell British author, mathematician, & philosopher (1872 - 1970) - I think that often we argue fiercely over matters we do not fully understand. I know I'm at fault here as well, and as far as Universal Health Care goes, I admit I do not know nearly enough to be considered savvy in the matter, however, I'd imagine I have read more on the subject than most.

Now here's the catch: It takes MONTHS if not YEARS for you to receive treatment for what ails you.

Check out this article:

Health Care America lauds film, critiques proposalPosted on: Wednesday, June 13, 2007 9:15 AM EDT
Health Care America, a non- partisan, non-profit health care advocacy organization, released the following statement in response to filmmaker Michael Moore's three-part proposal for health reform."We give Michael Moore credit for being honest about his true goal: a total government takeover of health care. While we welcome any serious discussion generated by his new movie, SiCKO, and believe that every American deserves access to affordable, quality care, Moore's "proposal," which includes abolishing private health coverage and treating drug manufacturers like a "public utility," is not a serious solution."Government-run health care seems like a simple answer to fix the challenges facing our health care system, but in reality, government-run health care systems around the world force patients onto long waiting lists, ration care, limit access to lifesaving medicines and often deny urgent treatments. A recent survey has shown that ninety-four percent (94%) of Americans say they don't want to scrap our current system for this kind of government-controlled model," said Sarah Berk, executive director of Health Care America.Patients in Canada's government-run system currently wait over 17 weeks between the time they are seen by a general practitioner and a specialist; in fact, wait times in Canada are at an all-time high despite increased spending. Many Canadian patients are forced to come to the US each year for procedures - - many of them lifesaving -- they can't obtain in their own country.
Sorry Hillary...........

The disengagement of our minds

I found this great article which I will post in parts. My comments will be a different color (so you can either read them or skip them) however I think most articles require active reading, so I'd encourage you to respond to the article in your own way.

More consumer education needed on HSAs

By Gary S. Mogel June 4, 2007

By NEW YORK — A key roadblock to health savings account acceptance is that many people know little or nothing about HSAs and their required high-deductible health insurance plans, according to industry experts. - I think it is very important for an individual to know about/understand what it is that is happening with their health care as well as their money. Producers like I exist to help guide individuals, however we can not, nor do we (I think) want to read the minds of our clients, and therefore we can only suggest what we believe is a proper fit.

The main culprit behind the learning inertia is the experience of many Americans over the past 20-plus years, during which they have become “disengaged” from their own health-care decisions, said Jerry Ripperger, director of consumer health for Principal Financial Group Inc. in Des Moines, Iowa.

Participating in a health maintenance organization, “people had to decide only whether to go to their primary-care physician or a specialist,” he said. With consumer-directed plans, they suddenly have to make myriad other decisions about providers, price and quality of care, Mr. Ripperger noted. - This may be a point that could be filed under "Why people shouldn't get HSAs" because they require more attention as well as responsibility. When you go to your doctor's office, you are not paying a flat $10, $15, or $20 co-pay, but you are paying the price the insurance company would pay if you had a $0 co-pay. So perhaps you need to then find the most cost effective doctors' office.

A quarter of U.S. adults — and more than a third in the 18-to-34 age group — “don’t know” or “know little” about HSAs, according to a report released last month by Mintel Group in Chicago.
“It’s hard to get young people to think about health care — they be-lieve they’re invincible,” said Terry Hunter, chief executive of Connect-YourCare, a health-care account ad-ministration firm in Hunt Valley, Md.

But HSA ignorance may be bliss, according to an April study by Cambridge (Mass.) Health Alliance, an affiliated hospital of Boston-based Harvard Medical School (InvestmentNews, April 16). Cambridge — as well as anti-high-deductible consumer groups — say that the plans discriminate against women and cause people to neglect their health to minimize out-of-pocket costs. - Another point for "Why people should NOT get HSAs". If you want an HSA you need to still be responsible for your health. REMEMBER that if you are saving money on the premiums, then you CAN afford to go to your doctor's office. DO NOT BLOW the money you've saved. Put it in your HSA or some other bank account so you don't end up avoiding the doctors'.

“Consumers are still uneducated about HSAs and their benefits,” said Susan Menke, a senior financial analyst for Mintel. The industry’s “direct to consumer” marketing and employers’ dissemination of information to workers are inadequate, according to the report.

Part of the problem is that HSAs aren’t in the comfort zone of many insurers and banks.

Which is why it's so nice that Golden Rule has partnered with EXANTE Bank. They actually know and understand what they are doing!

Insurers know health care but aren’t good at consumer education, while banks are good at consumer education but don’t know health care, said Kirsten Trusko, banking senior manager for BearingPoint Inc., a management and technology consulting firm in McLean, Va. Again look at the Golden Rule - EXANTE Bank team.

But insurers, banks and other companies in the HSA chain are determined to get the word out.
“We’re redesigning our marketing materials and looking carefully at media and presentation options,” said Dennis Triplett, president of health-care services for UMB Financial Corp., a bank holding company in Kansas City, Mo. Flashcasts and podcasts will be used to reach out to consumers who are more comfortable with those information delivery methods, he added.
The bank uses separate “business to business” presentations to convince employers to offer HSAs and high-deductible plans, and employees to sign up, Mr. Triplett noted.
Principal has presentations geared to educating brokers and agents, who in turn educate clients, Mr. Ripperger said. The insurer, a major provider of retirement benefits, also conducts training on employer premises to show employees the benefits of HSAs and high deductibles.
Before employees buy in to HSAs, “skepticism and distrust” have to be overcome, said Vik Kashyap, chairman of Canopy Financial, a San Francisco firm that manages HSAs.
They often are intimidated by the high deductible and don’t realize that it usually is waived for preventive care, Mr. Kashyap added. - Be careful with this, at Golden Rule you have to buy a rider that will allow for that quality. At Aetna you do not. Please be sure to ask about the various plans you may be interested in.

For employees and clients who don’t need the HSA to pay medical costs, an effective strategy is to emphasize the accounts’ savings and tax advantages, he said. Contributions, investment earnings and eligible expenses paid from HSAs are tax-exempt, Mr. Kashyap noted.

Employers can get employees’ attention by “seeding” the accounts with startup money to help offset some of the initial deductible expenses, Ms. Trusko said. The average “seed” is about $1,200, but it varies widely, she noted.

Financial advisers also must take on HSA education responsibilities, as about 30% of client retirement savings will go toward health care, Ms. Trusko said.

Advisers should discuss HSAs with clients in the same conversations where they discuss the likes of individual retirement accounts and 401(k) plans, Mr. Hunter said.

Lower premiums, and the tax savings, make the HSA “a financial no-brainer,” said Regan Turner, a certified financial planner with Professional Financial Specialists Inc. in Boulder, Colo.

- While I tend to agree with Mr. Turner, an HSA is not right for everyone. I happen to think that they are right for most people, but you need to ask yourself what your end game is.

Why you shouldn't go with an HSA!

As you know I've been quite the HSA advocate for health insurance. I own an HSA, my boss looked at it and couldn't figure out why he wouldn't want one and so now he has one, and well, a lot of people I come into contact with see the benefits of them. However they are not for everyone.

I think that the world longs for honesty so I try to give it to those I'm in contact with and so now I'll try to give you some honesty too.

Why are HSAs bad?

First off, let's consider WHY you want one. While you may save greatly on your premiums, you may not save on your doctors' office visits. You must pay what the insurance company pays (a heck of a lot more than a $10-20 copay). ALSO in order to get the benefits of the tax deductions, you must have enough money in your account to be able to fund your visit -- otherwise you'll be penalized by the bank that holds your HSA. To transfer your funds, you'll need at least one business day for the transfer to clear. Don't get caught without enough funds! Also, most HSAs happen to pay a little over 4.0% while the market is at 5.+% (since I'm not a financial advisor I'll let you do the math....)

Second, if you are planning on having children in the near future, please make sure that you will be saving enough money to pay for it! An HSA does not cover maternity!

Lastly, you may want to look into riders if you do not have sufficient savings to cover your deductible if something were to happen prior to your saving enough money. It would be really awkward to find that the day after you signed up for your plan that you incurred a huge bill! Please think ahead and learn as much as you can before purchasing a plan.

Great Article!

I found this article while I was doing some reading. Thought it might be helpful for all of you who are concerned, confused, contimplative, or considering HSAs as your Health Insurance choice:

Health Savings Accounts do double duty
By Eileen Alt Powell - The Associated Press

NEW YORK --New rules governing Health Savings Accounts are making them more attractive to consumers, who can use HSAs to help reduce health insurance costs now - and, potentially, in retirement.
Health Savings Accounts are like Individual Retirement Accounts for health care. They were created by Congress in 2003 so that workers could cover some of their medical costs with pretax money if they have high-deductible health insurance plans.
The idea is that workers and their employers can fund the tax-free accounts, with withdrawals used for copays at doctors' offices, prescription and nonprescription medicines, and hospital services not covered by insurance.
Because unused balances in the HSAs can be rolled over from year to year, some financial advisers are suggesting that the accounts can be a way for families to accumulate money to be used to cover health care costs in retirement, including Medicare deductibles and long-term care insurance.
JoAnn Mills Laing, author of "The Consumer's Guide to HSAs," said that there were 3.6 million HSA accounts at the end of 2006 with $5.1 billion in deposits, up from 1.1 million accounts with $1.2 billion in deposits at the end of 2005.
She predicts further growth, in part because more companies are offering high-deductible insurance plans to their workers. That's because these plans are less costly for employers and employees than traditional health policies but still give workers coverage for medical catastrophes.
"Employees who hadn't been able to get insurance coverage are enthusiastic if they can get high-deductible policies because it gives them peace of mind," said Laing, who is chief executive of Information Strategies Inc., a human resources consulting firm in Ridgefield, N.J.
She pointed out that in addition to payments related to Medicare and long-term care insurance, seniors can use HSA dollars for chiropractic sessions, nursing services, dental care and glasses.
To qualify, a health insurance plan must have a minimum deductible of $1,100 for an individual and $2,200 for a family. The maximum out-of-pocket expenses are set at $5,500 for an individual and $11,000 for a family.
Under the old rules, consumers could only set aside in their HSAs the equivalent of their insurance deductibles. The new rules have raised those limits so that an individual can put $2,850 into an HSA this year, while a family can put in $5,650. People 55 and older can add $800 as a "catch-up" contribution.
Also new this year, according to the Internal Revenue Service, is that employees can ask their employers to make a one-time transfer of the balance in Flexible Spending Accounts or Health Reimbursement Arrangements into their HSAs. (FSAs and HRAs are specialized, employer-sponsored health plans).
And some consumers can exclude from their gross income an HSA funding from an IRA.
The rules are outlined in IRS Publication 969, "Health Savings Accounts and Other Tax-Favored Health Plans." Qualifying medical expenses can be found in Publication 502, "Medical and Dental Expenses." (SEE: http://www.irs.gov/pub/irs-pdf/p969.pdf )
Hugh Bromma, chief executive of Entrust Group, a retirement plan administrator in Reno, Nev., said high-deductible policies and HSAs "should be especially attractive to younger people who are healthy and don't expect a lot of claims."
He doesn't see the HSA as a substitute for retirement savings plans, such as IRAs or company-sponsored 401(k) accounts, since the retirement plans generally allow people to save more.
This year, for example, a worker can set aside up to $15,500 in pretax income in a 401(k) account.
The funds grow tax-deferred, and are taxable when withdrawn in retirement.
HSAs also are funded with pretax dollars and grow tax free. But withdrawals are not taxed when used for qualified health care spending.
"This means the money accumulates tax free and, if you don't use it, it's terrific savings," Bromma said.
"So if you can, why not have both a retirement account and an HSA?"
Bromma's firm specializes in self-directed retirement accounts, which make it easier for individuals to invest their savings in nontraditional ways, such as in real estate holdings or limited partnerships.
He's seeing some of this investing in HSAs, too.

HSAs (why they'll take over health insurance)

So I know I've talked about HSAs before and I also know I haven't written anything for a while . . . not that there REALLY is anyone watching this blog, but I like to think positively.

However, thanks to all of you who ARE watching for not overloading the comment sections. :)

Ok more seriously, I was reading an article this afternoon about how Health Savings Account enrollees are predicted to Rise to 30 Million by 2009. ( http://chicago.dbusinessnews.com/printnews.php?newsid=118451)If you think that there are

301,816,434 people in the US as of today (since there is roughly one birth every 8 seconds and a death every 13 seconds and an international migrant comming here every 27 seconds, that number is going to be off by . . . now!) That would be rougly 1 out of every 10 people who will own an HSA. However, by 2009 there will be an extra 5,727,622 people in our country. which means, if I did my math right, that roughly 1 out of every 10 people will have an HSA. hmmmmm

So what would 10% of the entire US population see in an HSA? Well it can save you money on your premiums, it can save you money on your taxes and it can even stop global warming! Maybe not the global warming part but it can easily to the first two things.

How can it save you money on your premiums? Basically an HSA is paired with a high deductible health plan (HDHP) and simply by the nature of the HDHP, because you agree to pay more for your health expenses, it costs you less up front. A lot of people don't like this idea because they would like to walk into a doctor's office and simply hand them a $10 bill, however when they see that I and my fellow HSAers start saving thousands of dollars a year simply because we pay the discounted amount (maybe $30 more per doctor visit) instead of $10, they'll want to be more like us!

Worse than Geiko!

So perhaps I should stand up on a table, holding a tiny mug of something and say "saving money is as easy as . . . "

"Sorry Mate, I'd rather stay standing . . ."

I just talked with a woman who is paying $1,300 a month for insurance.
Look at an HSA!

Update! - she is now paying 1/3 the price WHILE saving for retirement, WHILE saving on her taxes . . . ALL WITH AN HSA!!!!

Boring title

I was looking at my title "Health Insurance as I see it" and thought 'how boring! I'm not a boring person, so why should I have a boring title?' But, why is it boring? I've decided it's boring because people don't know how exciting health insurance is! There are SO many intricacies that I can't even begin to wrap my mind around them sometimes. For instance if you want the short-cut way, just offer someone a basic plan, but if they are a business owner, and could use group insurance, there are a myriad of add ons that can be thrown in that could save some SERIOUS money! For instance you could toss in a FLEX plan (FSA) that could enable a company to go around paying FICA taxes. Not a bad deal. So with that, who said insurance was boring? (It's especially not boring when I'm about to go home for the weekend)

Paying for my car

So a friend of mine stopped by yesterday. He needs health insurance. I can help. We've met numerous times before to sign him up, and realized that, yes, I can save him about $50 per month. This is a good thing. However, a lot of people think WORST case scenarios when shopping for health insurance. What if I get sick, what if I sprain my ankle, what if I BREAK my ankle, what if I get run over by a bus!? What if, what if. I've found that one of the best ways to think about this issue is to look a few months back, then try to look forward.

As always, "Past Performance Does Not Guarantee Future Results" however, it can give you a fairly good sense of how you are doing health wise I think. I'm rarely sick, so it's probably not likely that I'll get sick tomorrow. I've only broken one bone in my body (doing a stupid human trick) so providing I steer clear of stupid human tricks, I'm probably not likely to break another bone anytime soon. Seeing as I'm relatively healthy, I don't need all the bells and whistles that come with an incredibly expensive plan. Yes, if I need to go to the hospital, I don't pay anything, but I really AM paying for it in my premiums. I may pay close to $200 a month just so I don't have to pay $500 at the hospital...... If I cut my premiums down to say $90 or $110 a month, I'm saving around $100 a month and after 5 months, I can easily afford to pay the $500! The beauty is what if I DON'T go to the hospital in 5 months, what if I don't go for a year? I just saved almost a grand! I could sure use that grand elsewhere...... like paying for my car insurance.

Why did I choose my plan?

This is MY opinion. This is not necessarily how you should choose your plan, it's just how I did....

My wife and I are relatively healthy, we rarely go to the doctor (and for that he loves us). I get up every morning and hit the gym before going to the office. She makes amazingly healthy and delicious, well balanced meals. And we hike almost every weekend.

We were paying close to $500 a month for health insurance we never used. (That's $6,000 a year btw) After becoming licensed to sell health insurance, I quickly learned about things called HSAs (Health Savings Accounts). These are high deductible health care plans which allow you to pay for EVERYTHING up to a certain deductible. Bad idea right, that's a lot of money out of my pocket! For some people, yes, an HSA is a bad idea. However, for my wife and me, it makes a lot of sense.

Our monthly premium was more than cut in half, saving us over $3,000 a year.

Problem - what if I have to go to the doctor? Well, I pay what the insurance company would pay. In our case, somewhere in the neighborhood of $75 instead of our prior $10 copay. That's pretty steep, except when I look back and remember that I'm saving about $250 a month, so I can afford to pay for at least three doctor visits that month with what I just saved!

If, Heaven forbid, I have a major hospitalization, I have to cover up to my deductible, which I strategically placed at around $3,000 (the amount I've saved a year) and then my insurance covers 100% of the rest! Good deal, and for all that heartache (and body-ache), I break even. If I don't have to go through crazy hospitalization or other numerous testings that will cost me an arm and a leg, I end up ahead and, if the past is any forecaster of the future, I will almost every time! Oh, did I mention that the money I put into my HSA is TAX deductible!? Now, not only do I end up ahead, but I can take tax deductions for my own money.

That seems to make good sense to me. Does it make sense to you?

Why a blog?

As I sit here, I realize that there is a lot of confusion surrounding Health Insurance. If I could in any way, shape, or form, help eliminate some of that confusion, I'd help at least someone. I am not by any stretch of the imagination a "health insurance guru", but if I can help clear something up I will! So let's get started and see if I have anything to offer.

Universal Health Care

According to a recent news article which recounted Obama's interaction with a crowd in Trenton, NJ a woman complained about health care costs.

"Sharon Masino, a card dealer since 1984 at Caesars casino in Atlantic City, told Obama dealers there decided to unionize recently in part to oppose a new health care plan she said would have cost her $20,000 per year to help treat her ill husband."

Unionized health care is wonderful for those who are too sick or ill or old to be able to afford less expensive health coverage, however since money as of yet fails to appear out of thin air someone gets stuck with that bill. That would be the healthier individuals. The healthier people of the nation have to pay more. This is almost akin to a tax on being healthy and fit!