|
Author: Christopher Cooper Article source: http://www.healthynature.co.uk/. Used with author's permission.
Most people with health insurance, especially employer paid health insurance, really don't know what their health care costs are. Furthermore, in many cases, they are limited in which health providers (doctors, hospitals, pharmacies etc) they can use.
Most people are locked into a network of doctors. They know what the co-pay is, but have no idea what the doctor actually charges.
When insured consumers are hospitalized, they rarely see the bill. They don't know if the insurance company was overcharged or not. There are firms that audit hospital bills for insurers and self insured companies. They get paid a percentage of what they save on the bill payer by finding overcharges, duplicate charges and the like. The last I heard these firms were still making lots of money.
Overcharging, whether deliberate or not, by doctors and hospitals drive up health care costs for all. (So do malpractice suits, but that's another story.)
In order to give consumers more direct control not only over their health costs, but in the choice of which doctor they can see or which hospital they can enter, Congress enacted the Health Savings Account Availability Act. As of the beginning of 2004, individuals who are not otherwise insured can have Health Savings Accounts (HSA) , which carry with them some very attractive tax benefits.
An individual can set up an HSA for himself or his family. An employer can add an HSA option to the so-called cafeteria benefit plan it may already offer.
The money put into the plan is before taxes, including Social Security, if part of an employer plan. Otherwise it is a above-the-line deduction, meaning you don't have to itemize your deductions to get the tax break and that the deduction is not subject to the phase-out rules that make many itemized deductions unavailable to high wage earners.
The plan is set up like an IRA. A trustee approved by the IRS must be used. Money put in the plan grows tax free and funds withdrawn for qualified medical expenses are also tax free. Unlike the older Flexible Savings Accounts offered in employer cafeteria plans, you don't have to spend the money put into the account by year end or otherwise lose whatever's left. Money can be rolled over from year to year. This can allow for a nice chunk of money to accumulate that can be withdraw tax free at age 65.
In order to qualify, the individual or family must purchase a high deducible health insurance policy. These are special policies that have a minimum deductible of $1000 to a maximum of $5000 for an individual and $2000 to $10,000 for a family. The higher the deductible, the lower the premium.
Individuals can deduct the lesser of $2250 or the deductible on the policy: for married couples or families it is double that. If over 55, the deduction is $600 higher for individual and $1200 higher for couples and will continue to rise at $100 a year until 2009, where it will be capped at $1000 for individuals and $2000 for families.
The money in the HSA cannot be used to pay the premiums for this policy except in certain circumstances (basically when you're unemployed). It is meant to meet the deductible, co-pays, drug costs, eyeglasses or any other medical expense that could be itemized on an individual tax return as a medical expense.
Money withdrawn in excess of qualified medical expenses is taxed as income and subject to a 10% penalty, unless the owner is disabled or over 65. Any money in the account at death is added to the taxable estate.
There are no income limits on this plan. If started early, when you are still young and healthy a substantial amount of money could accumulate to either meet higher medical costs as you get older or to use to supplement your income.
It pays to compare the costs of this plan with whatever your insurance you have now. It might turn out that your employer's plan is still cheaper and you might want to keep it. Or you might want to consider HSA's for their portability (you carry it from job to job without cost or loss of any contributions) and the tax benefit of having another vehicle to shelter income and capital growth, while giving you more control over the cost and quality of your health care. Chris Cooper is a retired attorney who has spent several periods of his life deep in debt. At http://www.credit-yourself.com he tries to pass on some of the knowledge he picked up in his journey to become debt free.
Why it is Important to Hire Just One Real Estate Agent to Buy a Home
When you start looking to buy a home, doesn't it make sense to work with a number of Realtors, to be sure they will find you the "perfect home?" Not necessaril...
How To Pay Off Your Home Loan 10 Years Sooner Without Spending One Penny In Extra Payments
How a Simple Plan with a Common, Yet Overlooked Home Loan Can Save You Hundreds of Thousands of Dollars Without Changing Your Budget By a Single Penny!
Searching The Internet Without Search Engines
The World Wide Web contains more than ten million websites with thousands more being added daily from all over the world, and search engines are tasked with pre...
7 Key Items To Include In Your Email Signature File
One of the most important and often overlooked methods of promoting your on line business or service is your email signature file (sometimes called a "sig"). Th...
Lack of Time! Perception or Reality
Where does the time go? Managing time means more than managing your life against the clock. It means taking time to look at the priorities that you say are impo...
Creative Emulation
In business we have a number of ways or tools that we use to stimulate improvement such as brainstorming, benchmarking and problem solving. While these can all...
How to Avoid Getting Rejected for Reciprocal Links
Often, when someone is beginning a reciprocal link campaign, they have a lot of trouble getting people to link back to them. This article will show you some com...
Are You an Optimist or a Pessimist?
I have been giving some thought lately to optimism and pessimism. Basically, these are attitudes. Attitudes that shape and formulate our entire existence. I mea...
Pick Up Your Pen and Lose Weight!
Can keeping a personal journal actually increase weight loss? Read on . . .
Family Life or How to Buy Chair for a New Baby
Children live in present; adults much more in the future or
past. Try and act like a child: enjoy the moment.
Trade Shows Are Not a Waste!
According to the Center for Exhibition Industry Research (the trade association for trade shows), industry spends more than $60 billion annually on trade show p...
Effective Band Rehearsal
If your band is in rehearsals, either preparing for gigging, or practising new songs to add to your repertoire, the chances are you will have to hire a rehearsa...
Why is Prevention So Important?
One of the least known and least practiced aspects of medicine is prevention. If you look at a list of medical specialists that have evolved in our system of we...
The Great Baby Name Debate
The name you choose for your child will last a lifetime. Whether you're looking for something original that will stand out from the crowd or a traditional name ...
Why Tiger Woods Golf Swing Technique Is So Effective
Golf sensation Tiger Woods' golf swing technique has been the subject of many interesting studies.
Dream Board
One important piece of wisdom I've gained is that nothing happens, no forward steps are taken until we first have a dream. But even when we have a dream, we ca...
Read Food Labels To Lose Weight
Many people are frustrated because they are working out and not losing weight. However, if they made a small change in the the way they look at food by reading...
Debt Consolidation Services - 3 Things to Watch Out For With Debt Consolidation Companies
Sometimes debt consolidation companies online can be shady. Make sure you watch for some warning signs before you sign on the dotted line.
Blogging Can Improve Your Search Engine Ranking
Having a blog which uses keywords and links effectively means you can boost your ranking in search engines.
Interview with Best-selling Entrepreneurial Authors Barbara Winters and Nick Williams
As a newly self-employed journalist / writer and life coach, I found Barbara Winter's book, "Making a Living Without a Job" invaluable so when I got a chance to...
Creativity, The Law of Attraction, & Networking
...I invited them to be part of my JJK VIP Networking Seminar so that they could network and share their gifts, goals and services as a group. It was tremendous...
How to Get Free Publicity in In-flight Magazines
If you're targeting an educated, more affluent audience with your message, and your topic is a good fit, in-flight magazines can be one of your best publicity t...
Online MLM Promotion - The 4 Wrong Ways And 4 Right Ways Of Doing It
Online MLM promotion is a totally different kind of promotion compared to offline MLM promotion. Not knowing the difference may mean the failure of your online ...
Time Management Doesnt Exist! So What Can You Do?
An article about time management, how exciting! Finally, you can learn how to manage your busy schedule packed with errands, trips, chores, and other responsibi...
|
Print this page