Category Archives: HSA

Health Care Reform: Artificial Deadline Number 13

In his Health Care Reform address yesterday afternoon, President Obama directed Congress “…to finish their work and schedule a vote in the next few weeks.”  They had better get cracking…

The Democratic timeline, according to The Republic: “The House takes up the Senate bill and passes it by March 19. A few days later it passes a reconciliation bill and sends it over to the Senate, which starts the voting process on March 26.” March 26th is the day that Congress is scheduled to break for Easter.

President Obama has been widely reported as telling Republicans that he is willing to consider ideas suggested at the summit but so far, there is no new written legislation incorporating these ideas:

1) Senator Tom Coburn’s (R-OK) suggestion regarding undercover Medicare investigators to root out fraud.
2) An appropriation of $50 million to states to creatively tackle medical-malpractice disputes.
3) An increase in reimbursements for doctors who accept Medicaid.
4) New language in the bill in support of health savings accounts.

The New York Times adds an interesting point on the timing….

“But Mr. Obama has not said anything about the drafting of legislative language that the nonpartisan Congressional Budget Office needs to provide a new cost analysis of the legislation. It could take the budget office two weeks just to produce the revised cost analysis. Only then will Democrats know if they need to make any further adjustments, and whether they will be able to generate the votes to pass a bill.”

I would ignore talk about timelines for the moment; there really is much for Congress to do. They have their work cut out for them if they truly are going to get to a vote “…in the next few weeks”.

Someone, PLEASE send the President’s cell phone number so we can tell him these artificial deadlines just don’t work!

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HSA – Health Savings Account

The health savings account (HSA) was introduced in 2003. There are really two sides to an HSA plan: the savings account, usually referred to as the HSA, and the health plan.  The HSA is a tax advantaged medical savings account. Savings can be used  to pay the deductible of the corresponding  High Deductible Health Plan (HDHP). The HDHP must meet specific guidelines to qualify for HSA status.

There are some similarities between an HSA and a flexible spending account (FSA). Employers don’t have  to fund either the HSA or the FSA. HSA’s allow deposits up to the maximum contribution limit, set annually by the IRS.  For the year 2010, the amount  is $3,050 for individual coverage,  and $6,150 for family coverage, and includes both employee and employer contributions.

Unlike FSAs, the unspent HSA funds roll over each year. Contributions, as well as interest earned, remain free from taxes. Disbursements are also tax free, provided they are used to pay qualified medical expenses.

By investing in a health savings account, employees get a tax advantaged account that stays with them. They may continue to contribute as long as they remain covered by a qualified HDHP.

Qualified HDHPs are very different to “traditional” health plans. Because of the differences, some employees may be initially reluctant to embrace them. We will look at these in our next HSA post.

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