November 17, 2013


Health savings account popularity will likely continue to rise (BRIAN SODOMA, 10/22/13, Las Vegas Review Journal)

Health saving accounts have climbed to $18.1 billion in assets, representing more than 9.1 million accounts, a 29 percent jump from fiscal year 2012 to 2013, according to investment research firm Devenir. The average account balance is $1,981, up 5 percent from last year, according to the report.

For decades, the medical consumer has taken a low maintenance approach to health care. Under a low-deductible health care plan, copays are low for doctor visits, prescriptions or lab fees -- usually $10 or $20. Of course, all of this comes at a price.

Low-deductible plan premiums can sometimes cost twice as much, or even more than high-deductible plans, said Chris Cochran, an associate professor and chairman of the University of Nevada, Las Vegas' health care administration and policy department. So more people opting for a lower-cost, higher-deductible plan (deductibles range from about $1,500 annually for an individual to upward of $6,000 for a family), with the added assurance of setting a little tax-free money aside should medical care needs arise, makes sense on the surface.

The thinking behind creating the health saving accounts is that the person who chooses a qualified, high-deductible plan with a low premium but high out-of-pocket, upfront cost will be inclined to sock away some of that premium savings tax-free into an interest-bearing account that can be tied to an investment fund. That money will then be there when he or she, or the family, need medical care.

There are caps for how much in pretax dollars a person or family can set aside. For 2013, individuals can set aside up to $3,250 in their health saving accounts. That number climbs to $3,300 in 2014. For families, the figures are $6,450 for 2013 and $6,550 for 2014.

If you're over 55, you can contribute an additional $1,000 a year in catch-up contributions. You must also be under age 65 to qualify for a health savings account.

Jeff Bakke, chief strategy officer of Evolution 1, a technology service provider for health saving and flexible spending account-holders, refers to health saving accounts as a "triple tax advantage." Deposits are not taxed, interest earned goes untaxed and withdrawals, provided they are for qualified health expenses, also go untaxed. [...]

A recent survey from Towers Watson/National Business Group on Health indicated 66 percent of large companies (defined as 1,000 employees or more) offered at least one qualified, high-deductible plan this year. The survey indicates that number will grow to 80 percent next year.

Ruby Warthan-Vance, a group benefits broker with Orgill/Singer and Associates, a Las Vegas-based full-service independent insurance agency, said health saving accounts are becoming more popular in Nevada today than, say, five years ago.

More consumers are seeing that with a low-deductible plan, the consumer pays the insurance company up front, regardless of whether the service is used or not, Warthan-Vance said. For those who rarely go to the doctor, paying a lower premium and having untaxed money set aside in a health saving account may save money in the long run.

Warthan-Vance said the move requires a shift in thinking about health care spending. When shopping for phones or car tires, for example, consumers are research savvy, she said. When working with a high-deductible plan and health saving account, the same attention to detail is needed.

"It's just kind of taking that bold step and being open-minded, being more engaged in your health care, deciding whether you should go to urgent care or a walk-in clinic. Should you use generic or brand name for a prescription? ... It makes you an active consumer interested in the cost of your care."

Chris Wilcox, a CPA and shareholder with Johnson Jacobson Wilcox CPAs, is hearing less about health saving accounts from his clients, but thinks that should change. The accountant works almost exclusively with business owners, and says health saving account benefits could help both the employer and employee.

"It might be one of the more underutilized vehicles out there to help businesses control health care costs," he said.

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Posted by at November 17, 2013 9:07 PM

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