Health Savings Accounts Analysis

There is a move from a noncompetitive insurance environment to a competitive one because the competition was not by hospitals to provide the best and cheapest care, but rather among the insurers to get the healthiest patients. Consumer driven plans are central to the process because they are ideal for risk selecting the young and fit who have been driven to new plans. Healthy people could watch their account balances grow which leaves the truly sick behind in traditional plans. This particular type of competition is being used to attract the healthy and in turn lead to price increases because insurers have little incentive to control the prices medical providers are charged. It is the responsibility of the patients to worry about the cost and the patient does not have the same power as the insurance competitors do. According to a key South African regulator, Alex van den Heever of the Council for Medical Schemes, “Competition based on the shifting of risk

The consumer driven health plan (CDHP) is a combination plan, one with a high deductible plan and one with a tax-preferred savings account plan directed by the patient. The plans work together for the patient with the high deductible for major losses and the savings accounts for out of pocket expense or non-covered expenses. With the CDHP, patients are more inclined to research their medical care in order to make informed decisions (Valerius, Bayes, Newby, Seggern , 2008).

(e) Ensuring Free Choice. Workers who cannot afford the coverage provided by their employer may take whatever funds their employer might have contributed to their insurance and use these resources to help purchase a more affordable plan in the new health insurance exchanges.

Healthcare costs in the United States have been rising for several years and show no sign of stopping. In 2008, the United States spent on 2.3 trillion on healthcare, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 19801. Although the large amount of money invested in healthcare does translate to better care for Americans, the worsening economic situation, rising costs, and federal government’s deficit have placed a great strain on the system. This includes private employer-sponsored health insurance coverage and public insurance programs such as Medicare and Medicaid. According to the Henry J. Kaiser Family Foundation, a private and non-profit healthcare analysis organization, “in 2008, U.S. health care spending was about $7,681 per resident and accounted for 16.2% of the nation’s Gross Domestic Product (GDP); this is among the highest of all industrialized countries”1. Concerns for the enormous strain on the financial systems that fund healthcare and the desperate need to provide adequate healthcare for Americans have driven many a President since Theodore Roosevelt in 1912, to seek some type of healthcare reform and universal healthcare for all Americans. President Barack Obama succeeded where many had failed and on March 23, 2010, a national health reform law, the Patient Protection and Affordable Care Act was signed into law. On March 31, 2011, the Department of Health and Human Services (HHS) issued new rules

If ever you've had to pay out-of-pocket for medical, dental, vision or prescription expenses, you likely either already had some money set aside or wish you had... That's where Healthcare Flexible Spending Accounts (HCFSA), Limited-Purpose Flexible Spending Accounts (LPFSA) and Health Savings Accounts (HSA) come in particularly handy. As a Benefits Administration Professional, I've become acquainted with the various types of accounts available to cover healthcare costs. The similarities and differences in these account structures will be covered in this essay.

One benefits of having a HSA plan is that anyone can get a plan. As long as your employer offers a HSA qualifying insurance policy you can get a HSA. Another benefit is they are tax deductible which is $3400 for single people and $6750 for married or head of household. Plus, the money you put on your HSA grows so you can use it for any health issues. There is also the advantage of getting access to the money right away from your HSA card and the money is tax free on some medical expenses. An HSA card can also be away of having some sort of retirement because when you turn 59 ½ withdraw the money for any purpose. But if you do this you do have to pay taxes on

Most recent data shows that people benefit from health saving accounts and that they have sufficient amount on the account to cover out of pocket expenses. Furthermore, data indicates that health saving accounts are not being used as tax shelters by people with high income. It reveals that majority of individuals who has an account has incomes below $60,000. The most important that the same survey establishes that 41% of health saving accounts purchasers did not have medical insurance in the past six months period. Many people point out that money on those accounts may be used for many reasons. However, the early data showed that customers of the accounts are using their HSAs as proposed – mostly to cover qualified medical costs. The council has confidence in those imposing third-party substantiation requirements on HSAs will increase expenses and limit Americans’ opportunities for health care coverage. These additional costs will limit the attractiveness and efficacy of health savings accounts.

In order to keep contributing to your HSA, you are not able to have any other type of health insurance other than an HDHP. On the month you are first eligible for Medicare, your account should be changed over to zero dollars a month in order to avoid any tax penalties. You may be able to still withdraw money, however, from your HSA once you enroll in Medicare in order to help pay for any medical expenses you may incur. These expenses can include deductibles, copayments, premiums and coinsurances.

The Flexible Spending Account (FSA) is valuable to consumers, businesses, and policymakers it helps better assess returns on health care spending. If you have a health plan through employment, it can be beneficial to have a Flexible Spending Account (FSA) for copayments, deductibles, some prescription medication, and some durable medical equipment. Using an FSA can decrease your taxes that you pay. An FSA is an account an employee can put money into to pay for certain out-of-pocket health care costs, but you must use the money in an FSA within the plan year.

In Alabama, California, and New Jersey don’t allow income deductions in HAS and in New Hampshire and Tennessee one is still taxed on earned interest. In most cases the health expenses paid through an HAS will outweigh the tax savings. If someone has other debt with interest rates for example a car it would be more beneficial to put money into paying down balance for such interest rates than the savings place into an HAS. In order to qualify for tax breaks the money in HAS has to be spent on health care costs. If funds are utilized for other than allowed medical expenses if under age sixty five one will owe income tax plus a penalty, up to twenty percent. If over sixty then penalties disappear only taxes are due which would be similar to an

In the book Priceless Curing the Healthcare Crisis, author Dr. John C. Goodman, believes that the healthcare system is sick, and he has the cure. Dr. Goodman dissects the Affordable Care Act and urges readers to take charge of their healthcare. The neutralizing of government allows sellers and buyers to act on their judgment and incentivizes prudent spending on healthcare. In turn, the market will prevail on its accord through price negotiations which drive supply and demand. Goodman, a renowned health economist, is more commonly known as the “Father of Health Savings Account.” Priceless delves into the history of Health Savings Accounts and advocates for few restrictions on HSAs. Fewer restrictions will encourage saving money for health expenditures, compare cost, value, and quality of health services, and incentivize innovation from healthcare providers to offer quality services at lower price points. The biggest problem that Goodman uncovers is obscure prices, hence, the title Priceless.

Many employees must designate a health plan through their employer. These days, as HMOs (health maintenance organizations) and managed care plans continue to proliferate, that means a choice between bad and worse. As employees line up in the lunch-room for a process called open enrollment, they may be surprised to learn that managed care rates have gone up — again. The mirage that managed care is cheaper care is finally fading. And, for the first time in years, employees may also have the promise of free choice in medicine in the form of a new method of financing health care. Consumers are already aware of horror stories involving HMOs, but cheap rates persuaded many that managed care is less expensive. Recent

The Health Savings Account is advantaged by taxes savings that is available for taxpayers in the United States for people that are deductible in high rate. Employees and employer could contribute through pretax payroll deduction or the financial institution. The amount should not exceed amount that set by IRS. It is fall under health plan only.

| Pressure to save the money in your HSA might lead you to forgo care.

A HSA is owned by the employee as opposed to FSA owned by the employer. The funds in the HSA stay in the account and rolls over from year to year if there are leftover funds. The funds are also portable meaning the can follow the employee if they change jobs. The HSA offers a lot of tax advantages such as contributions made from your paycheck are not taxed. The leftover over money in a HSA can continue to grow tax free in the account which makes it attractive option. The rollover of funds contrasts from the use it or lose it funds in a FSA account.