What I have is a flexable spending account. My employer takes out a set amount of money from my pay every paycheck pre tax. When I have an elligable expence I submit the receipt and get repaid from this account. Since the deduction is pre tax your actual taxed portion of your check starts only after this money is taken out. Yes this is a good deal especially if you or yours need braces for example. My kid does to the tune of $5200. So that 5200 will come out of my pay over the course of a full year and not be taxed. Be careful because if your expences do not exceed your deduction the IRS makes your forfeit any left over money. Hope that helps and other questions just ask
My firm has this option too. I'm not sure the program you are asking about is the same as Mailman's. I didn't go with it as I have a wife and small child who go to the doctor as frequently as chicks and toddlers do and we were planning to have #2. based on the numbers I ran it didn't seem worthwhile under our circumstances.
When we had the people in explaining the benefits I asked who typically used this option and after cutting through the b/s answer they are programmed to give she said "young single guys b/c they don't go to the doctor often." Our program allows any money saved but not spent to be invested in our 401(k) program, so it makes sense if you have money left over and you are most likely to have money left over if you don't go to the Dr often.
Like I said, not sure of the specifics of your program and how similar it is to ours, but that is the feedback I received and my reason for not doing it.
When we had the people in explaining the benefits I asked who typically used this option and after cutting through the b/s answer they are programmed to give she said "young single guys b/c they don't go to the doctor often." Our program allows any money saved but not spent to be invested in our 401(k) program, so it makes sense if you have money left over and you are most likely to have money left over if you don't go to the Dr often.
Like I said, not sure of the specifics of your program and how similar it is to ours, but that is the feedback I received and my reason for not doing it.
The more investigating I do on this, the more it appears to be a very good financial strategy.
A single individual can contribute up to 2800 per year, which is all deductible on income taxes, meaning if one is in the 28% bracket they make an automatic $700. To top that off, all money that is made in the HSA account from that point on, either by interest, mutual fund investments, or individual stock investments, is all tax deferred and if one ever decides to use the money for medical expenses, it is completely tax free.
A single individual can contribute up to 2800 per year, which is all deductible on income taxes, meaning if one is in the 28% bracket they make an automatic $700. To top that off, all money that is made in the HSA account from that point on, either by interest, mutual fund investments, or individual stock investments, is all tax deferred and if one ever decides to use the money for medical expenses, it is completely tax free.
[FONT=ARIAL, HELVETICA, SANS-SERIF][/FONT][FONT=Georgia, Times New Roman, Times, serif][FONT=Arial, Helvetica, sans-serif]Uninsured Numbers Said To Be Up, Another Reason For HSAs
[/FONT][/FONT]
[FONT=Georgia, Times New Roman, Times, serif]The latest figures from the Department of Labor indicate the number of uninsured individuals is growing. Critics say HSAs are part of the answer to this trend but others claim the results are deceiving. [/FONT]
[FONT=Georgia, Times New Roman, Times, serif]However, in the discussions about the “rising” rate of uninsured Americans, it is interesting that none of the major media outlets discussed Health Savings Accounts (HSAs) and their impact on various groups supposedly at risk. [/FONT]
[FONT=Georgia, Times New Roman, Times, serif]Designed to help uninsured Americans get the type of healthcare safety net most individuals in this category say they want, HSAs are conspicuously absent from the torrent of stories unleashed by the latest Census Department figures.
Health Savings Accounts (sometimes called medical IRAs) enable individuals to put aside pre-tax dollars for medical needs today and, for retirement, while being insured with relatively inexpensive high deductible healthcare insurance.
HSAs were enacted late last year as a means of helping small businesses and individuals better manage their healthcare costs by combining tax-benefits with Consumer Directed Healthcare Programs. That they are seen as a possible answer is shown by the rapid adoption going on in those states that have authorized insurance companies to offer them. [/FONT]
[FONT=Georgia, Times New Roman, Times, serif]Surveys Show Interest, Adoption[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]Small businesses, in HSAfinder’s surveys, are turning to HSAs in growing numbers. One out of ten in our latest surveys said they would have HSAs in place by the end of 2005.[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]Large corporations are also rushing to embrace HSAs, for instance it is reported that Aetna, Zale’s, Frank’s Nursery and Crafts, Whole Foods Market, Northrup Grumman, Quest Diagnostics, American Standard, and Staples have embraced HSAs. [/FONT]
[FONT=Georgia, Times New Roman, Times, serif]To be sure, this is not a big spike in the uninsured population, with just 15.6% versus just 15.2 % in 2002. But people are worried about these uninsured individuals.[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]HSAs are especially attractive for young people, the group supposedly most “hammered” in the recent run-up, according to John F. Holahan, a health economist at the Urban Institute, a nonprofit research center in Washington was quoted in the New York Times. His analysis indicates that 10 million of those uninsured reported by the Census were young people, 25-to 34-years-old.[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]Yet, these are very people who would benefit well from HSAs.
As former Senator Dave Durenberger says in the forward to my book, “the younger, healthier sector of the population will take advantage of HSAs.”[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]HSAs are not just for the young[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]In projections, done with the aid of Houston Economist, Dr. Kenneth E. Lehrer, estimated that more than 20 million HSA accounts will be in effect by the end of 2006. [/FONT]
[FONT=Georgia, Times New Roman, Times, serif]HSAs are also a viable alternative for individuals with lower salary expectations. In Texas, with one of the highest uninsured rates, an individual HSA policy begins at $88 a month.[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]Some Drawbacks Cited[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]The drawbacks to HSAs, critics say, include the fact that high deductible insurance, beginning at $1,000 required the individual to pay all of these costs up front. Yet, figures indicate that 82% of Americans never reach $1,000 in deductibles each year. [/FONT]
[FONT=Georgia, Times New Roman, Times, serif]This critique also brings in play the fear by health economists that the chronically sick would be left out of a CDHC program such as HSAs.[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]In October, federal employees will get their first chance to opt for HSAs as a healthcare insurance option.[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]Across the nation legislators such as New Hampshire’s Fran Wendelboe are also pushing for HSA options for state employees.[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]HSAs aren’t the total cure but they are certainly in the equation and should be talked about in any discussion. The fact that they weren’t in any of the mainstream media we monitored makes us a little concerned.[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]HSAs should be highlighted as a viable and positive alternative in any mainstream media discussion. [/FONT]
They aren't all use it or lose it Cincy. Ours allows any non-used savings to be transferred to our 401(k) plan or to an IRA when we leave the company, I forget which (I don't have it).
My understanding of the main drawback occurs if you go to the doctor often and would use all of or more than the money you put into the plan. You have to look at the coverage you get in the HSA as compared to what you would get under your HMO/PPO plan. My recollection is that the coverage isn't as good once you get past the savings; i.e., your deductibles and co-pays are higher. Thus, if you go frequently your increased co-pays will outweigh the savings.
All plans are different though so look into the specifics.
My understanding of the main drawback occurs if you go to the doctor often and would use all of or more than the money you put into the plan. You have to look at the coverage you get in the HSA as compared to what you would get under your HMO/PPO plan. My recollection is that the coverage isn't as good once you get past the savings; i.e., your deductibles and co-pays are higher. Thus, if you go frequently your increased co-pays will outweigh the savings.
All plans are different though so look into the specifics.
