February 24, 2006


HSA's Are the Right Medicine at the Right Time (Sally C. Pipes, 2/24/06, Real Clear Politics)

President Bush has put reforming health care at the center of his domestic agenda. Unlike previous presidents, he’s prescribing policies, such as Health Savings Accounts, that rely on freeing up individuals and markets, expanding tax savings, and providing more health care options, rather than expanding government.

Health Saving Accounts, first allowed in 2004, combine high deductible medical insurance with a side fund that provides a tax deduction for contributions, tax-deferred investment growth, and tax free ultimate dispersal, provided funds are spent on qualified medical expenses. In 2006, an individual is responsible for the first $1,050 to $2,700 of expenditures ($2,100 to $5,450 for families). Routine care is paid for out of pocket, albeit in a tax advantaged way.

Just as car and homeowners insurance doesn’t pay for maintenance and minor repairs, health insurance kicks in only when true catastrophe strikes. Once a deductible is met, however, a generous insurance package, often 100 percent of covered expenses, takes over the burden. Money that isn’t spent in one year rolls over into the next, earning compound interest.

In short, Health Savings Accounts put the insurance back into health insurance, provide Americans with a triple tax free means to save for future expenses, and deliver a strong incentive to economize on the use of health care.

Like any change to the status quo, HSAs have powerful and vocal enemies.

Ms Pipes runs that "first allowed in 2004" past the reader too quickly. The GOP has been trying to get them through for years but W achieved it in the Medicare reform bill.

Posted by Orrin Judd at February 24, 2006 5:54 PM

My wife called our bank about getting an HSA and they didn't know anything about it. Nor does their website.

Their motto is:"Not your Typical Bank." Regarding HSA's ... I hope that's true.

Posted by: Genecis at February 25, 2006 9:33 AM

Apparently Tufts and Harvard Pilgrim offer HSA eligible high deductible plans and the HSA bank accounts to go with them. Bank North and HSA Bank, a division of Webster Bank have HSA accounts.

It seems difficult to get good access to HSA info in Massachusetts, particularly for the self-employed.

Posted by: steve at February 25, 2006 10:38 AM

My husband and I are self-employed and we went with Uni Care's HSA plan. We did it all online, and it was a very easy process. We are in Texas, but isn't Uni Care a national carrier? You might give it a try.

Posted by: Stormy70 at February 25, 2006 10:53 AM

Genecis: go to hsabank.com -- you can do it all on line until your "not...typical" bank figures out what's happening around them in the marketplace and decides to offer it.

Posted by: John Resnick at February 25, 2006 11:50 AM

What John said. I set up with hsabank.com for my employees. Had to sign three forms, and the rest is all administered via the web.

Posted by: Gideon at February 25, 2006 1:07 PM

Steve: Although it's never put this way, in effect HSAs are not possible (i.e., are very unattractive) in Massachusetts because of the state-mandated compulsory coverages every policy has to have. If you do the math and compare the high deductible policies to the regular policies, they're just trading you deductible dollars for premium dollars.

Posted by: David Cohen at February 26, 2006 4:42 PM