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Health Savings Accounts
Most people with health insurance, especially employer paid health insurance, really don't know what their health care costs are. Furthermore, in many cases, they are limited in which health providers (doctors, hospitals, pharmacies etc) they can use. Most people are locked into a network of doctors. They know what the co-pay is, but have no idea what the doctor actually charges. When insured consumers are hospitalized, they rarely see the bill. They don't know if the insurance company was overcharged or not. There are firms that audit hospital bills for insurers and self insured companies. They get paid a percentage of what they save on the bill payer by finding overcharges, duplicate charges and the like. The last I heard these firms were still making lots of money. Overcharging, whether deliberate or not, by doctors and hospitals drive up health care costs for all. (So do malpractice suits, but that's another story.) In order to give consumers more direct control not only over their health costs, but in the choice of which doctor they can see or which hospital they can enter, Congress enacted the Health Savings Account Availability Act. As of the beginning of 2004, individuals who are not otherwise insured can have Health Savings Accounts (HSA) , which carry with them some very attractive tax benefits. An individual can set up an HSA for himself or his family. An employer can add an HSA option to the so-called cafeteria benefit plan it may already offer. The money put into the plan is before taxes, including Social Security, if part of an employer plan. Otherwise it is a above-the-line deduction, meaning you don't have to itemize your deductions to get the tax break and that the deduction is not subject to the phase-out rules that make many itemized deductions unavailable to high wage earners. The plan is set up like an IRA. A trustee approved by the IRS must be used. Money put in the plan grows tax free and funds withdrawn for qualified medical expenses are also tax free. Unlike the older Flexible Savings Accounts offered in employer cafeteria plans, you don't have to spend the money put into the account by year end or otherwise lose whatever's left. Money can be rolled over from year to year. This can allow for a nice chunk of money to accumulate that can be withdraw tax free at age 65. In order to qualify, the individual or family must purchase a high deducible health insurance policy. These are special policies that have a minimum deductible of $1000 to a maximum of $5000 for an individual and $2000 to $10,000 for a family. The higher the deductible, the lower the premium. Individuals can deduct the lesser of $2250 or the deductible on the policy: for married couples or families it is double that. If over 55, the deduction is $600 higher for individual and $1200 higher for couples and will continue to rise at $100 a year until 2009, where it will be capped at $1000 for individuals and $2000 for families. The money in the HSA cannot be used to pay the premiums for this policy except in certain circumstances (basically when you're unemployed). It is meant to meet the deductible, co-pays, drug costs, eyeglasses or any other medical expense that could be itemized on an individual tax return as a medical expense. Money withdrawn in excess of qualified medical expenses is taxed as income and subject to a 10% penalty, unless the owner is disabled or over 65. Any money in the account at death is added to the taxable estate. There are no income limits on this plan. If started early, when you are still young and healthy a substantial amount of money could accumulate to either meet higher medical costs as you get older or to use to supplement your income. It pays to compare the costs of this plan with whatever your insurance you have now. It might turn out that your employer's plan is still cheaper and you might want to keep it. Or you might want to consider HSA's for their portability (you carry it from job to job without cost or loss of any contributions) and the tax benefit of having another vehicle to shelter income and capital growth, while giving you more control over the cost and quality of your health care. Chris Cooper is a retired attorney who has spent several periods of his life deep in debt. At http://www.credit-yourself.com he tries to pass on some of the knowledge he picked up in his journey to become debt free.
Latest News:Site: Yahoo! News Search Results for news Futures flat; Lehman buyout news, data awaited (Reuters via Yahoo! News) Stock index futures were little changed on Friday as investors awaited news on the fate of Lehman Brothers after a slide in its stock this week heightened fears over whether the investment bank can survive. Myanmar's Suu Kyi to get family letters, news mags (Reuters via Yahoo! News) Detained Myanmar opposition leader Aung San Suu Kyi has managed to wring small concessions from the ruling generals in the form of letters from her family and some international news magazines, her lawyer said on Friday. SEC Looks Into UAL Stock Scare; Implications For Online News? (CBS News) A ton of digits have been devoted to this in other spots but the SEC's decision to investigate takes it to another level. The backstory: a six-year-old news story about UAL declaring bankruptcy made it into the Tribune-owned Sun-Sentinel 's current news flow, was picked up by a Google (NSDQ: GOOG) News bot and, via a reporter for a newsletter, made it onto Bloomberg News. After a lot of buck ... JCDecaux in talks for News Outdoor Group in Russia (AP via Yahoo! News) French outdoor advertising firm JCDecaux SA said Thursday it is negotiating to buy Russian rival News Outdoor Group from global media company News Corp. News Corp tightens grip on Premiere with new CEO (Reuters via Yahoo! News) Rupert Murdoch tightened his grip on German pay-TV broadcaster Premiere by appointing News Corp executive Mark Williams as CEO in a move to get the company back on track. Phila. mayor to announce grim budget news (The Philadelphia Inquirer) The Nutter administration is expected to announce grim budget news today, which is all but certain to lead to significant spending cuts - perhaps as high as 10 percent - in some city departments, according to three sources familiar with the budget. Help News pick Stadium's greatest moment (New York Daily News) The News is marking the countdown to the final game at The House That Ruth Built by reflecting on Yankee Stadium's greatest moments - and we're asking you - the reader - to help us pick out the best of the best. JCDecaux and News Corp. in talks to combine outdoor ad groups (International Herald Tribune) The News Corp. chief executive, Rupert Murdoch, has recently expressed nervousness about investments in Russia, where News Outdoor generated the bulk of its revenue last year. SEC Looks Into UAL Stock Scare; Implications For Online News? (paidContent.org via Yahoo! Finance) A ton of digits have been devoted to this in other spots but the SEC's decision to investigate takes it to another level. The backstory: a six-year-old news story about UAL declaring bankruptcy made it into the Tribune-owned Sun-Sentinel's current news flow, was picked up by a Google News bot and, via a reporter for a newsletter, made it onto Bloomberg News. JCDecaux in talks to buy News Corp. billboard unit (AP via Yahoo! Finance) In a deal that would create the world's largest outdoor advertising company, French conglomerate JCDecaux SA said Thursday that it is in talks to buy Russian rival News Outdoor Group from global media company News Corp. Site: news - Google News News Analysis A Difficult Road Awaits Panetta at the CIA - New York Times
MORE RESOURCES: Site: Yahoo! News Search Results for insurance NC insurance commissioner orders lower auto rates (AP via Yahoo! Finance) North Carolina State Insurance Commissioner Jim Long on Thursday rejected an industry request for an almost 13 percent increase in auto rates and has ordered a reduction instead. Auto-insurance rates in N.C. ordered cut by 16.1 percent (Winston-Salem Journal) N.C. Insurance Commissioner Jim Long rejected yesterday an industry request for an almost 13 percent increase in auto rates and has ordered a reduction instead. Survey: Insurance Industry Expects Subprime Issues to Negatively Impact 2009 Performance (Insurance Journal) Insurance executives expect subprime and other credit issues to continue to have a significantly negative impact on the industry's financial performance in 2009, and they see credit and pricing risks Nevada Names Baker Acting Insurance Commissioner (Insurance Journal) The Nevada Department of Business & Industry named Betty C. Baker acting commissioner of the Division of Insurance. Baker will oversee the Division while a replacement is sought for Alice Molasky-Arma Here's the lowdown on 'private' bank and broker insurance (USA Today) Q: I've noticed several banks and brokerage firms claiming they have private insurance that protects accounts above the FDIC and SIPC limits. Should investors trust those promises? State unemployment insurance claims up (Macon Telegraph) The Georgia Department of Labor announced Thursday that 59,090 laid-off workers filed first-time claims for unemployment insurance benefits in August, an increase of 72.1 percent from August 2007, but a slight decrease from July to August this year. Fitch Ratings Gives Island Insurance an "Aq" (Insurance Journal) Island Insurance Co. Ltd., Hawaii's largest locally owned and managed property and casualty insurance carrier, has reaffirmed its "Aq" rating for Quantitative Insurer Financial Strength (Q-IFS) by Fit Looking for Free or Low-cost Health Insurance? (Carteret County News-Times) (ARA) - It's no secret that accessing health care is a challenge for the 47 million Americans who are uninsured. Lack of health insurance forces many Americans to choose the health care they receive based on what they can afford, not what they actually need. Uganda: Health Insurance May Face NSSF Fate (AllAfrica.com) The government has finally resolved that all salaried workers and employers, will with effect from July 2009, be required to make compulsory contributions to the new National Social Health Insurance Scheme. The net inflow from life insurance companies into equity stood at Rs550bn till March 31, 2008 , foreign institutional ... (India Infoline) The life insurance industry was the largest investor in the Indian equity markets, ahead of foreign institutional investors and mutual funds, according to the reports. Site: insurance - Google News Obama Plan for Government Insurance Draws Criticism - Bloomberg
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