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It’s in the news every day and odds are it’s affecting you or someone close to you right now. The inability to get health care due to the high cost is taking a huge toll on individuals, the self-employed, and small businesses alike.
On the financial front, millions of families are struggling with medical debt today. Bankruptcies caused by medical debt have risen from 14% in 1991 to 50% in 2001.
Worse than leading to financial ruin, lack of adequate medical benefits is to blame for premature deaths. In a July 7, 2004 article HealthDayNews Reporter, Amanda Gardner, states “Americans who lack health insurance when approaching retirement age are 43 percent more likely to die prematurely than their peers who have insurance.”
Three-part health care benefits promises to bring relief to this desperate situation in the United States.
Part 1
There has been much talk about the Health Care Savings Account bill signed into law by President Bush in December of 2003. As with any new system, there seems to be confusion about the whole concept of such a Health Care Savings Account. Many wonder how this will be the solution for those who are struggling with their financial and/or physical health.
The Health Care Savings Account is simply a savings account to be used only for medical bills. It is a special type of savings account in that, like an IRA Account, is tax-sheltered.
There is no minimum amount that must go into this type of account, however, there is an annual limit to the amount that can be tucked away there.
Money that is deposited into a HSA account is 100% tax deductible and can be easily accessed by check or debit card, still without being taxed, whenever needed to pay medical bills.
What is not used for medical bills is the account holder’s to keep so it stays in their account and keeps growing on a tax-favored basis to cover possible future medical bills, or it can be kept and used for supplemental retirement, just like an IRA.
Under the HSA law, there are a wide variety of investment options in addition to fixed accounts, including mutual funds, stocks and bonds. Accounts can be maintained at any financial institution that is a bona fide HSA custodian registered with the IRS.
Part 2
The Health Care Savings account was never designed to be the sole source of health care benefits. Rather, congress has outlined a particular design for health insurance policies to be HSA-Qualified. In fact a person must have one of these government approved insurance policies in place before opening their HSA.
Perhaps a better lay-term for these policies would be “disaster,” or “catastrophic” policies. The deductibles on this insurance would be quite high and therefore the policies would generally not be used unless there was major medical treatment needed in any given year. (Still the policies are necessary to meet the requirements for the HSA program … and necessary under the better safe than sorry rule of thumb as well). The good news about these high-deductible policies is that the monthly premium should be quite low.
Depending on a person’s tax status, their insurance premiums may be tax deductible. Each year, all of the money deposited into a person’s own HSA will be tax-deductible on line 25, front page, of the 1040 form (assuming the person has qualifying income as a self-employed person or is participating as an employee at a company with under 50 employees). This will cut a tax bill by an average of $1,200 for a family (and about $500 for a single).
In those cases, it is really true that with an HSA, medical bills are being paid with money that would otherwise have gone to pay taxes!
The combination of the HSA and High-Deductible Health Care Policy will provide for medical care in the long run or, in case of a major medical problem, in the near future.
Part 3
For those of us who need to see the doctor before we can build up an appreciable savings account, there still needs to be an element in this diversified “package” that makes care immediately available for more common and routine medical issues.
This will be an especially important consideration for anyone with chronic or pre-existing conditions.
Further, for those who could manage to pay up front for their immediate care, it stands to reason that they should have access to that care at the most reasonable price possible.
This type of benefits will generally be a PPO (Preferred Provider Organization) or a PAO (Provider Access Organization), such as AmeriPlanUSA®'s revolutionary "Consumer Driven Medical Program", AmeriPlan Health®. Again, money from the savings can be used to pay the monthly fee for this type of program … and for the reduced rate medical bills.
While considering which plan to sign up in, keep in mind that some of these plans will automatically provide discounts on care that would raise the cost of an insurance policy, lowering household health related expense even further. Some will also automatically cover alternative care practitioners and treatments, allowing the patient greater personal freedom to choose their preferred method of care. Some plans will actually provide a credit card that can be used to pay for care at the time of service, providing flexibility and perhaps eliminating need to withdraw from the HSA to pay for immediate care.
For some who need immediate medical attention, this reduced-fee-for-service type plan may be the best element of benefits to put in place first. Of course, one would need to select a benefits program that includes pre-existing conditions.
There is light at the end of this health care crisis tunnel and soon, with this diversified arrangement, the vast majority of Americans will be able to afford the deserved quality health care that had become attainable only by the wealthy.
For more information on a unique medical discount fee for service plan, get the details on the phenomenal new AmeriPlan Health® Program at http://www.4-health-benefits.com
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