January 30, 2006

RESTORING INCENTIVES AND REWARDING GOOD BEHAVIOR:

Health Savings Accounts shot in arm for society (TERRY SAVAGE, 1/30/06, Chicago Sun-Times)

Most important, there's no reward anywhere in the system for staying healthy! That is, there was no reward until Health Savings Accounts came along two years ago. HSAs encourage people to stay healthy and spend wisely, because the money they don't spend belongs to them, and grows tax-deferred.

HSAs combine a high deductible health insurance policy and a tax-favored savings account. Instead of buying a health insurance policy with a $250 deductible, you'd buy a policy with a $5,000 deductible. It sounds scary, but that policy costs much less. The money you or the company saves on insurance premiums -- as much as 40 percent of traditional costs -- can go into a special, tax-deductible savings account and be used to pay for medical expenses tax-free. Unspent money grows for future years' expenses.

Many employers contribute some or all of their insurance premium savings into accounts for their employees. In 2006, an individual can put as much as $2,700 a year into an HSA, or $5,450 for families. But you can start an HSA account with a much lower amount. For those who can't afford a contribution, the high-deductible, low-cost medical insurance plan will at least protect them against bankruptcy caused by medical expenses.

If your company doesn't offer health insurance coverage, you can search for individual HSA plans at www.ehealthinsuranc-e.com, run by Bob Hurley, who says his site is seeing a higher percentage of people choosing this type of health insurance.

Hurley advises younger workers to turn down employee-sponsored plans in favor of these inexpensive HSA policies. He notes that with company plans, if you lose your job you'll be stuck with expensive COBRA interim insurance. And if you have a pre-existing condition, you might not find health insurance when COBRA runs out. An individually owned HSA plan is tax-advantaged, secure and portable.

The real benefit to society is that HSA incentives encourage people to spend wisely because it's their own money.


This is the real genius of the prescription drug bill.

Posted by Orrin Judd at January 30, 2006 6:56 AM
Comments

But is it too late? How many people think that they have an inherent right to all the latest drugs, and should get them for free (or as close to it as practical)?

Posted by: b at January 30, 2006 11:04 AM

Just got a quote from ehealthinsurance.com and the results were, as expected, disheartening.

I entered our Zip here in the Garden State, then I entered a Zip from PA, just across the river.

The lowest quote for us poor NJ bastards was $333 a month. The lowest PA quote was less than half that.

Some time ago, we contacted Bob Andrews (NJ 1st Dist.) ("The New York Times has characterized Congressman Andrews as 'fiscally conservative...and socially moderate.'") and he sent back a customized form letter that totally avoided our question ("Why are NJ residents restricted to a hand-picked array of insurers which make the cost of insurance prohibitive?") and segued into some drivel about universal health care.

From what I hear some rep in AZ is pushing to allow us to choose a company in another state.

Posted by: Brian McKim at January 30, 2006 1:28 PM
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