My commenter Ron deserves to have this post promoted from yesterday’s open thread. I oppose HSAs (and for that matter employment-based health insurance) as a policy because they are diametrically opposite to being the overall solution to universal health insurance, although I’m pretty much indifferent to whether we go with a tax-based single payer system or a strictly-regulated, compulsory, community-rated (non-underwritten) individual or group insurance system as the preferred outcome. However, in real life we’re not getting to any of those politically any time soon, and as a solo operative with some of my own health problems it appears to me that a high deductible plan with an associated HSA is my best option. So I’ve got one.
Ron explains in this example why that might be a good option for others….of course he doesn’t get to the community-rating/risk pool division issue, but that’s for another post. Here’s Ron’s example:
A 30 Year Old Nurse Who Is A Single Mother
Pick Any Des Moines Hospital
Annual Income: $50,000
A single parent mother making $50,000 a year is not rich. Many
employers will pay $400 a month for single coverage but the employee
must pay the additional $400 a month to add on their child, out of
their paycheck. Now the Mother has deductibles and co-pays on both her
and the child. Probably, knowing health insurance like I do, the
employee insurance has switched from co-pays on RX to co-insurance
($10 co-pay for Generics and $25 co-pay on Brand Name PLUS Co-Insurance
of 50% on Brand Name). Remember, some people when they get sick have RX
bills of $1,500 a month, ask Montel Williams. So if the mother or the
child got sick we have no idea what will be the out of pocket annual
expense for just RX. PLUS, If the mother got ovarian cancer and could
not work, a requirement for keeping her insurance, she would be put to
COBRA for insurance termination. Everybody, including people who sell
group insurance, say they can’t comprehend why that makes even the
slightest difference in the world. To me it’s simple, I would prefer a
contract that can’t be singled out for termination because of my
relationship to some employer.
The HSA Individual Option
The Mother pays the total family premium of $78.68 per month. Now
she saves $400 a month coming out of her paycheck that she can save or
spend on her baby. The $400 a month, that the employer is currently
spending on the Mother’s single insurance, is redirected to the bank,
in the Mother’s Tax Free Health Savings Account or HSA. The bank must
be FDIC insured, it’s the law.
Annual Deposit From Employer: $4,800
Maximum Annual Out-Of-Pocket (OOP) for the family: $5,200
So the maximum annual OOP expense for this Mother and child is
capped at $400 a year and she is currently paying $400 a month, out of
her check, with no idea how much she could owe with co-pays and
co-insurances.
No FICA Tax on HSA deposits. The FICA tax is 15.3% and is split
between employer and employee. Now the hospital won’t pay 7.65% on
every dollar the mother earns. Employers love the HSA when they figure
it out.
The Hospital is depositing $4,800 a year in the mother’s HSA. She or
her employer may maximize her HSA annual deposit and save on taxes,
another $400 or a maximum of $5,200 may be deposited each year.
When the mother goes to the doctor everything is the same. The
doctor’s bill is $80 for example. The first thing is the charge is run
it through the PPO, exactly like they are doing it now, and the charge
is sent to the insurance company. The insurance company then sends an
Explanation Of Benefits (EOB) that says, your $80 charge has been
diminished to (example) $50. Do you want to pay the $50 with personal
funds or would you prefer to have it deducted from your HSA? Once
covered charges hit the deductible they are paid at 100%.
If the mother put the max in her HSA and didn’t use any HSA funds,
which some people do, at 65 years of age she would have over $400,000
at 4% interest. If she uses average $1,300 a year she will have over
$300,000. If she uses $2,600 a year she will have over $200,000 at 65
years of age. Also she has the freedom to place her HSA balance in
mutual funds for the possibility of a higher return.
I tell clients to max out their HSAs because 30 years of retirement
health care expenses will be expensive. HSA funds dedicated to
retirement health care expenses are never taxed and money that is never
taxed will last longer in retirement.
Next month retirement will be high lighted when the House throws it’s retirement bill on the table.
Who thinks this Mother should keep her present employer’s insurance at $400 a month out of her check?
Categories: Uncategorized
Oh, and for the person who made the insulting comment about “people thinking about getting pregnant more” because they’ll have to come up with the “front-end money”, how insensitive is that? If you’re not already collecting SSI, you’d better be praying that every fertile woman is having 3 and 4 kids so that you will have SSI to collect. Without another baby boom, our SSI will be in the tanker too. Too bad you won’t be able to use your HSA account to live off of when your SSI runs out. You’re all a bunch of kooky crooks.
What I think is most humorous is how badly you “professionals” communicate. I’ve seen better grammar on a third grade writing test. I won’t even comment on the spelling errors.
Frankly, the real problem is the high cost of medical care. That paired with crooked professionals in both the medical and insurance agencies means the customer gets screwed. These PPOs and HSAs make the HMOs look like the good guys.
Here’s my story:
We moved to ND where HSA/PPO insurance is the only option for us. But to get maternity coverage, my monthly premium would go from $200 to $600. So, I declined maternity coverage. But, when I told the underwriter about my c-section (only have 1 kid), they rated us up to $239/month. My husband is still unemployed and so we have no other coverage and no additional money to put into our HSA.
Beyond that, when I called the company (assurant) to better understand what is covered and what isn’t, I received absolutely no help. The customer service rep couldn’t even give me an example of what would be covered. I asked if my son’s immunizations would be covered, if I’d have to pay at the office, or would be billed, or how would this work. I’m new to HSA. I’m used to paying a $20 or $40 co-pay and getting service. It’s been two months since his immunizations and I still haven’t heard anything from Assurant. Am I out of the woods or is a $150 medical bill in the mail?
And what of his ER visit last month?
So far, I feel like I’m paying $239 for nothing. The HSA/PPO policy is so confusing, it sounds as though I could end up paying $5000 for an ER visit.
And for the lunatic who said pregnancy is planned, I’m glad your life is so neatly ordered. Both of my pregnancies occurred while on prescription birth control. I lost the first pregnancy but six months later, got pregnant again. I was planning on NOT getting pregnant and I did. If it were to happen now, while we’re on this ridiculous HSA/PPO thing, I’d have no coverage at all.
Yeah, that sounds like a great alternative to an HMO. My agent can’t even tell me how the plan works entirely. And frankly what I’ve heard from you Ron makes me want to run screaming.
Sure, I didn’t like paying the $600/month premiums I had when we had an HMO, but at least I knew what I was getting. I can barely afford the $239/month PPO/HSA that I have right now, so a $600 HMO is out of the question. But, given the chance, I’d switch to an HMO in a minute.
I maintain that the real problem is that we have let the medical and insurance industries get out of control. When a hospital bills $3,000 for 3 vicodin, there’s something wrong. When an insurance company will pay $120 for a chiropractic adjustment that would cost the patient only $40 in cash, there’s something wrong. So the doctors, hospitals and insurance companies (HSA, PPO or HMO) are all to blame.
My husband’s employer has just signed on with an HSA plan through the same insurance co. used previously. My ins. premium for the plan is $760 per mo. (That is an increase over last year’s premium in the PPO plan.) That $760 per mo. goes to the insurance company – not into an HSA account. We have a $2000 per person deductible. We will have to contribute $166.00 per mo. each into an HSA account in order to meet the deductible for this coming year. The employer is contributing nothing to the HSA accounts. We will have to pay all doctor visits and prescriptions up front out of pocket or out of the HSA account which is not yet established. I contacted our regular medical providers who were unable to tell me if we will be charged the full amount of each visit/procedure or if they will charge us at the ins.co. contract rate. Also, when we get prescriptions filled, the same problem may arise. While the end of year tax deduction will help our taxes, the upfront cost of this program is prohibitive for us because the premium alone takes a huge chunk out of my husband’s paycheck. This plan may be helpful if the monthly premium is low and there are cash reserves available to handle the HSA account, but I don’t see how it helps us in the short run when every dollar is precious. Your comments please.
I think HSA’s are a great way to provide health insurance. Health insurance is a major aspect to many lives.
Zippy,
Tell them we need a raise too. These agents getting commission on $20,000 a year premiums, per family, are playing golf while agents with HSA insurance that costs only $78.68 a month educate America for free.
Ron comes off so sarcastic and obnoxious I wouldn’t buy anything from him. Someone should report this thread to the company he represents.
Sue,
Your association coverage costs with a family Out-Of-Pocket (OOP) of $8,000 plus 40% of all Rx cost is:
Des Moines’ 30 year old Single mother and child = $881/month
Calf. zip 90210 30/yr mother and child = $$1,280/month
90210 — 50/yr old couple plus 2 children = $4,625/month
90210 — 60/yr old couple = $5,004/mo or over $60,000/yr!!!!!
Don’t grow older on your plan Sue, you can’t afford it.
Heck, the example they use to determine rates is a 35/yr old couple with 2 children in Montana and the premium is over $20,000 a year.
Sue,
I checked out your association insurance with no medical underwriting. Here is what I have found:
The above 30 year old single mother’s premium would be $881 a month (This is insane). That is over 10 times the HSA premium. Plus, the family out of pocket is $8,000 a year (higher than HSA coverage) with Rx never paid more than 60%. The total lifetime max is only a million too.
Under exclusions: any charges incurred as a result of any injury or sickness which arises out of or in the course of any occupation, except for owners, proprietors or partners who are not eligible for coverage under any Worker’s Compensation or Occupational disease law;
In Iowa farmers and owners can get worker’s comp. they just are not required to do so. So this coverage wouldn’t cover self employed people on the job. I suppose a farmer who rolls a tractor could say, “It was recreational tractor driving.” But at least self employed people would be covered at night when they sleep, so that’s good. But it is really expensive.
Of course the association membership dues would be in addition to the insurance costs.
Who really is making money here? Me charging $78.68 a month from the mother or your plan charging $881 a month with far inferior coverage, I ask you?
Oh and Sue,
//You never fully answered the questions I raised relative to tax treatment of the account in the event of loss of insurance due to premium non-payment//
Yes I did fully answer that and so did rdg. Nothing happens to the account. People can continue to use their HSA balance and get interest on their balances. You can’t make deposits in an HSA if you don’t have qualifying HSA insurance.
HSA balances are never taxed if the funds are used for qualifying medical expenses which include medical, vision and dental expenses. I have seen ads that say the money for a parking meter at the dentist can be paid, tax free, with an HSA.
Sue,
Yup, when a hurricane takes out a business everybody loses their health insurance, it’s insane.
You really said a mouthful. Of course to answer that many questions and correct all of the misconceptions would would take me too much time, so I won’t.
I will check out your New York Life health insurance.
CORRECTION SUE: You said//The issue I have with HSAs is that in addition to the high deductible, there can be pre-existing exclusion coverage//
Would you prefer that HSA law said that if you have an exclusionary rider it is illegal for you to pay your deductibles and save for retirement health care expenses with a tax free HSA? Well it doesn’t, sorry. rdg has an exclusionary rider for miscarrage but he may use HSA funds for that expense because HSAs have no exclusionary riders.
Ron, you want specifics here they are. The association I referenced, NMA stands for the National Management Association. Their insurance is managed by Marsh and handled through New York Life. It isn’t the best insurance I’ve ever seen in terms of premiums, but since I had been covered by a group plan I ended up with no pre-existing condition loopholes and it is cheaper than Texas high risk pool premiums. AARP also offers insurance through United Healthcare that I am currently exploring. Although not AARP age, my husband’s membership allows me to explore that option and it would be cheaper than my current premiums. According to their literature there is no pre-existing condition exclusion provided you have a certificate of insurance from a qualifying plan for the prior 12 months. My current insurance fulfills that requirement which is one of the reasons I’m glad I shopped for a group option. All of the policies have underwritng in that there are different pricing pools based on answers to the health questionnaire, but no pre-existing condition exclusion with evidence of qualifying insurance coverage. The issue I have with HSAs is that in addition to the high deductible, there can be pre-existing exclusion coverage which makes it very hard to predict what annual total out of pocket cost can be. If you are healthy and seeing a doctor once or twice a year, HSAs make perfect sense. If you have pre-existing condition exclusions and actually need high dollar health care frequently your combination premium and out-of-pocket expense may be higher than with a group plan. You never fully answered the questions I raised relative to tax treatment of the account in the event of loss of insurance due to premium non-payment. It would be interesting to understand those implications in terms of cost. My comment relative to President Bush stands–the issue isn’t whether he is being smart and saving money–the issue is that a guy whose health care I pay for with my tax dollars is touting a plan that will allow him to save money not because of the tax treatment, but because he has no health care expense. We can’t find a way to adequately insure our middle-aged, middle class as we transition to new health care scenarios, but we are taking care of guys who feed out of the taxpayer trough royally. For those of us who actually have to pay out of pocket, especially those of us who are older, HSAs aren’t necessarily going to fund our golden years. If it were up to me, the Federal government’s first money-saving step would be to eliminate subsidized health care for elected officials. If these guys actually had to shop for insurance we’d have better plan options. Ron, the thing I don’t understand is why you are so determined to paint the perfect picture of HSA clients socking money away with no health care expense. For some people, that is a reasonable scenario; for others it isn’t. Paint a balanced picture which is cost out your options and pick the one that makes the best sense for your health and financial situation. If I had taken the individual insurance plan which excluded my entire gastro-intestinal tract indefinitely as a pre-existing condition, one appendicitis operation would have probably exceeded my group premiums for the next decade. I may never need my appendix removed, or it could happen tomorrow. With my current plan, after the deductible is met, my appendix is paid for and with my current plan as long as I stay with group coverage I never have to play roulette with pre-existing condition exclusions. HSAs don’t give me that protection. If I were 20-something and could answer a health questionnaire without raising red flags, I’d sign up for an HSA in a heartbeat because then I’d have the time to save enough to balance out the health costs I’d be likely to encounter in middle age. And yes, I know that you would have never excluded my entire GI tract, just the hernia. But you are a salesman and therefore you don’t do the underwriting. My insurance salesman assured me that Golden Rule was one of the most liberal carriers and would never have ugly underwriting clauses. He told me to keep COBRA when the exclusion came through–suddenly he had no solutions. Fortunately, I was able to shop around and find some other options. By the way Ron, my house is built on solid ground–we’ll see who is begging politicians for relief at retirement. Remember, those potholes that don’t stay filled are the first sign of sinkhole. I hear you are going to have another bad hurricane season, better break out those sandbags–Tampa is prone to storm surge.
I think part there is some confusion about HSA. The HSA is a health savings account. To qualify for an HSA you have to have a qualifying high deductible health insurance plan. You can have the qualifying health insurance plan and not open an account. You cannot have the account unless you have the health insurance. So there are two components. The first is the health insurance. Then you can open and fund an account at a financial institution. You can contribute an amount not to exceed your deductible in the account every year. You can pay medical expenses from the account and they are paid with tax free dollars. That way you don’t have to wait to exceed a percentage of your income to deduct medical expenses. It also equalizes individuals with employer sponsored plans. The premiums for employer sponsored plans are tax free.
Most of the account providers I have seen charge what I would deem high fees. I am used to free checking at banks and Vanguard mutual fund fees. I loathe account set up fees, and ongoing maintenance fees. As more people open accounts the competition should increase and more low cost providers should be available.
rdg,
You are so correct so Sue will quit talking to you.
Everyone is getting HSAs. Matthew, poltroon, President Bush, you, me and a million others so far. Soon Sue will be the only one with no HSA balance when she retires so she will have to get down on her knees and beg a politician for a handout in retirement.
Sue,
//my professional associations, NMA, offered a group insurance plan. Their insurer tried to avoid me too//
Sure, sure Sue. Name this association and the name of the insurance carrier and I will check it out.
//Group, HSA and individual policies all have loopholes that favor insurance companies over consumers//
Sure, Sure Sue. Name an insurance company that has an HSA product besides us. HSAs are a bank product usually. You keep saying HSAs have loopholes and I keep asking what are they? A couple of days ago you were saying that HSAs have underwriting and at least I have got you to stop saying that uninformed blather.
//I am personally insulted everytime President Bush talks about his HSA and how much money it will save him, not because it’s a “TAX DODGE” but because he’ll never need to pay for health care//
I think you mean “THE BEST TAX DODGE” and all federal employees with an HSA must have an HSA qualifying deductible, it’s the law. President Bush get’s free care but it’s not insurance so he still qualifies, sorry. If I was advising President Bush I would say get an HSA too and set a wonderful example how a multi-millionaire should go tax free too, as an example for the rest of America.
//poltroon, read your insurance documentation, learn your rights, and check your billing because if you don’t you are going to continue to get patted on the head//
Just don’t pay attention to Sue because she makes all these wrong statements then rattles off a bunch of her uninformed opinions like her opinion is as valuable as someone’s who actually knows what they are talking about.
Again Sue, what are these so-called HSA loopholes?
poltroon,
//Quote: Finally, going back to your to your last question which is if your employer shuts its doors; are there COBRA extensions–the best way answer is that if you had a group insurance policy HIPPA provides that another group plan must accept you with no pre-existing condition exclusion. You have a 90 day window after leaving a policy where that provision still applies.//
Here is a better way to answer — NO. If the group is gone the COBRA extention is gone too. Then you have a 63 day period, not 90 as is repeatedly said on this board, to apply for new coverage with another group. Your flaw is that many employers make new employees wait 90 days on the job before they become eligible for the group coverage. That’s if the company offers coverage to employees at all, which many small employers don’t.
Notice how you didn’t have a new employer who just automatically picked you up poltroon. But you are correct that association groups usually don’t offer insurance without underwriting. Maybe Sue will provide a list of association groups that do, but I doubt it.
Poltroon, I went through the same thing you did–lost my job and went through COBRA. When COBRA was ending I found that one of my professional associations, NMA, offered a group insurance plan. Their insurer tried to avoid me too, but I pushed the issue by providing a certificate of insurance that showed I had maintained group coverage (not easy because my company had switched groups three times in prior three years so I had to present 2 certificates to show 18 months of coverage). I also contacted the president of my association and he called the insurer and questioned their practices. I got coverage with no pre-existing conditions pretty fast, but if I had taken the first set of answers I got, I’d still be uninsured. It’s not great insurance and the premiums have increased dramatically every six months but I didn’t get pre-existing condition exclusions individual insurance wanted to do. Being a good girl and paying premiums won’t get you anywhere, but being a tough consumer and asking hard questions can help. One of the reasons I’ve asked all the HSA questions I have is because I think most consumers don’t understand the full implications of any insurance they buy because they don’t know what questions to ask. The real issue we all need to face is that our health insurance market is a mess of confusing regulations and insurers looking to take advantage of consumers whereever they can. Health care providers exacerbate this with questionable accounting practices. Group, HSA and individual policies all have loopholes that favor insurance companies over consumers. HSA is cheaper upfront, but may not be if you have to buy a lot of healthcare services. We need a better system that shares risk, eliminates non-value added cost and more equally “charges” consumers for health expense. Most importantly we need a system where consumers can understand their “rights” and responsibilities. We aren’t even close to that yet. One of the problems is that consumers aren’t “lobbying” politicians for the programs they need. Instead, insurance companies are lobbying for the programs they want to sell. We all need to write our elected officials and explain the challenges we face so that they start to understand the issues better. A government official who gets free healthcare for life through his position doesn’t understand what those of us who have to shop insurance and pay premiums are going through. I guarantee you that any elected official over 40 who actually goes through underwriting would have a new view at the end of the process. But most of them have never gone through this. I am personally insulted everytime President Bush talks about his HSA and how much money it will help him save, not because it’s a tax dodge but because he’ll never need to pay for health care. It is an insult to working families that he even has that line in his speeches and demonstrates the total lack of understanding that our government has for the current situation. Poltroon, read your insurance documentation, learn your rights, and check your billing because if you don’t you are going to continue to get patted on the head and told you have no choices as people pull money out of your wallet.
Quote:Finally, going back to your last question which is if your employer shuts its doors; are there COBRA extensions–the best answer is that if you had a group insurance policy HIPAA provides that another group plan must accept you with no pre-existing condition exclusions. You have a 90-day window after leaving a policy where that provision still applies. They can rate you in a higher premium class but they can’t exclude a serious medical condition and there are group insurance options you can obtain through associations as well as employers.
Well, we had a group policy, and worked for a company that died because of 9/11… and when COBRA ended there were no other options. I asked about HIPAA and was told that didn’t apply. The company essentially went away, but one person kept it going, so maybe that made a difference.
My daughter was born with a small heart murmur. None of the doctors were concerned or thought it warranted treatment. However, when I tried to get individual insurance I was told she was uninsurable for 5 years after the murmur disappeared on its own. (In my state, they are not allowed to exclude conditions, so they choose to decline the whole policy.) I spent the first year of running my new company trying to find new health insurance for us. As far as I could tell, all the association “groups” were not true groups – ie, they would still decline for preexisting conditions. When an insurance agent tells you going bare is your best option, you know everything’s SNAFUed. All the years that I had been a good girl and paid for insurance meant nothing to anyone.
I don’t understand the HSA product. I say this even though I have one. Where I come from, There Is No Such Thing As A Free Lunch.
Quote:Finally, going back to your last question which is if your employer shuts its doors; are there COBRA extensions–the best answer is that if you had a group insurance policy HIPAA provides that another group plan must accept you with no pre-existing condition exclusions. You have a 90-day window after leaving a policy where that provision still applies. They can rate you in a higher premium class but they can’t exclude a serious medical condition and there are group insurance options you can obtain through associations as well as employers.
Well, we had a group policy, and worked for a company that died because of 9/11… and when COBRA ended there were no other options. I asked about HIPAA and was told that didn’t apply. The company essentially went away, but one person kept it going, so maybe that made a difference.
My daughter was born with a small heart murmur. None of the doctors were concerned or thought it warranted treatment. However, when I tried to get individual insurance I was told she was uninsurable for 5 years after the murmur disappeared on its own. (In my state, they are not allowed to exclude conditions, so they choose to decline the whole policy.) I spent the first year of running my new company trying to find new health insurance for us. As far as I could tell, all the association “groups” were not true groups – ie, they would still decline for preexisting conditions. When an insurance agent tells you going bare is your best option, you know everything’s SNAFUed. All the years that I had been a good girl and paid for insurance meant nothing to anyone.
I don’t understand the HSA product. I say this even though I have one. Where I come from, There Is No Such Thing As A Free Lunch.
Sue, your comments about maternity coverage raise a couple of points. The fact is that maternity care is a money maker used to subsidize the rest of the hospital’s operations. A local hospital is currently running radio adds touting their new maternity care ward. Why would they do this? To attract profitable business. The way that health care system works now is based on huge cost shifting and trying to get somebody else to pay the bill. So mothers with uncomplicated pregnancies and healthy babies end up subsidizing the ER. If people had to pay their own bills out of pocket they would be more likely to be sensitive to the cost they were incurring.
How is a healthy pregnancy insurable? It is not. Pregnancy is a planned event. People should save up for it and be prepared to pay for it. If people don’t want to do this, they can pay a high maternity rider and the insurance company will save and invest to pay for the planned expense. Economically what is the best deal for the individual? My view is that people would come out ahead if they saved on their own. With an HSA the maternity care could be paid for with pre tax dollars.
In my own case the HSA makes sense because by the time we could have a baby my COBRA coverage would be terminated. This would leave me with no coverage for a healthy prenancy, a miscarriage or a c section. My options are to join another group plan (through an employer or maybe joining the state high risk pool) or to get individual insurance. The individual insurance with no maternity rider and a miscarriage rider will still cover an emergency c section.
Sue,
Most of my clients are self employed and don’t get unemployment benefits so I never bring it up. I was responding to you saying you can’t use HSA funds for insurance. Also, HSA funds can be used to purchase insurance after the age of 65. My Mom pays $171 a month for her Medigap insurance. HSA funds may also be used to purchase Long Term Care (LTC) insurance at any age. And nothing happens to HSA balances under $10,000 if clients drop their coverage.
//But do us all a favor and share the facts//
Because I have the longest experience in America enrolling MSAs and HSAs I would be in a perfect position to do just that. You make me feel so welcome Sue with all of your slanderous remarks.
So instead I’ll focuse on Dan Perrin’s remarks above, how I have “done a great service.” You are probably aware that Dan Parrin has arranged for HSA clients to be interviewed by President Bush. Dan also is active in educating elected officials in DC and without Dan we probably wouldn’t have the HSA enacted into law.
I told you I used the initial example of a 30 year old single mother for a reason. It is darn hard to argue with so I’m glad Dan has it when he contacts our politicians in the future. However, I never use it talking with prospects, it’s a waiste of time.
And as far as me sharing the facts I have told you more correct information on the HSA than anybody else ever has, unless you can name someone who has informed you more. What person has given you more correct information on the HSA than I — Sue?
Ron, I never said that you lose your HSA–my example suggested that a mother with a sick child with significant health expense and no job wasn’t likely to have a large HSA balance. I asked if the balance became taxable without the qualifying insurance in force. You chose not to answer that question. You are indicating that people can pay insurance premiums when on unemployment. Does that privilege end when unemployment benefits end, even if the person doesn’t have a job? Is the premium payment taxable income when taken from HSA? What happens if people drop their HSA insurance with a balance below $10,000? Ron, I realize that you would love to troll for prospects by posting only positive messages with a link in your email to your website. But do us all a favor and share the facts.
//can use HSA balances to pay insurance premiums when they are on unemployment//
Just to make sure I understand, you mean when I person is “unemployed” not “on unemployment” – unemployment only lasts a few months (6 in California).
It’s still cruel to make a person who dutifully took up the independent responsibility to save for their health care costs pay it all out in premiums (note that this carries an additional cost of all the tax-free interest that would have accrued). I outright regret putting my savings into an IRA for the same reason: the savings allowed me to outlast unemployment, but having to use the money this way deprives me of retirement savings. At retirement if I raise my hand and say I have no money, people will just stare at me angrily and say “why didn’t you sacrifice and scrimp and save!??” It will take everything I have not to scream back at them, “I DID!!!”
Sue,
I didn’t call you a kook because you disagreed with me I called you a kook by the way you answered that question.
I can’t call you a kook but you can say about me//sales pitch…saying you give them full disclosure is different from actually taking the time to outline the relevant differences as they make their decision…high pressure tactics…gloss over the details…What are you afraid of Ron…..Be a man….rhetoric/scare tactics…you’re low cost pitch…//
I don’t shut down your discussion of HSAs, just your lies. You say we should fully discuss the differences but if I bring up cancer that’s a scare tactic and off limits. Sue who made you king?
And Sue, if sick people are declined on individual insurance, why don’t those people just get in the uninsurable state program?
The state uninsurable pools should have the HSA option too. After all, uninsurable people would like to pay their deductible with tax free HSA funds too.
gadfly,
//From what Sue says, it sounds like the insurance terminates once a person can no longer keep up regular payments. But what happens to the HSA savings?//
Yes, all insurance terminates when you stop making premium payments, employer group coverage or indivdual insurance, there is no difference. Sue is wrong on the HSA though. People can use HSA balances to pay insurance premiums when they are on unemployment for example.
Also you can’t lose your HSA. People who drop their insurance with a $10,000 HSA balance may continue to use HSA funds for all medical, vision and dental expenses. Sue is just plain wrong.
Ron, the thing that amazes me is that you seem so intent on shutting down any discussion of pros and cons of insurance option selection and that you also insist on the very immature tactic of calling people kooks who disagree with you. I would think that you want to be very sure your clients fully understand the financial obligations they are accepting with an HSA. It is a new product and many people who have been covered by group plans all their lives really don’t understand what they may be signing up to when they hear a pitch centered on low premiums and 100% coverage after the deductible is met. Average people do not read the detailed policy coverage document, so saying you give them full disclosure is different from actually taking the time to outline the relevant differences as they make their decision. I can tell you that I don’t buy insurance or financial services from people who use high pressure tactics and try to gloss over the details. I like intelligent discussions that cover the pros and cons so that I can make the decision that makes the most sense for my particular financial situation. What are you afraid of–that once a client understands the cost they’ll back out? Be a man, have an open debate on the real issues. HSAs are a good choice for people who understand the risks and still feel it makes financial sense, but they shouldn’t be a choice people take without fully understanding the financial obligation they assume. The real goal of HSAs and similar products is to start a culture of individual responsibility toward health care vs. the current dependence we have on employmer-based or government-provided insurance. Fundamentally that is a shift we need to make as a society, although the current product doesn’t really provide the transition phase safety net needed to absorb middle-class, middle-aged Americans due to its underwriting feature. The reward you may gain by dropping the rhetoric/scare tactics and discussing what is good and bad is that you might get clients who see a benefit and actually can afford the downside risk. HSAs aren’t all bad, they just aren’t a perfect solution, particularly if the client is chasing a low premium without understanding total cost. Short-term your low cost pitch may help your sales volumes, but longer term signing up informed clients and accepting the loss of clients not comfortable with the risk is the better way to build a market because guys that jump into this without understanding the obligations won’t be able to make the payments long-term.
//the baby’s insurance terminates just as fast if she doesn’t pay her HSA premium//
This raises an HSA question for me.
Ron says people need to purchase insurance as part of the HSA. Ron has also likened an HSA to a savings account where accumulated savings can be used for retirement if they aren’t drained by health care expenses. My question is what happens when a person is unemployed and runs out of money. From what Sue says, it sounds like the insurance terminates once a person can no longer keep up regular payments. But what happens to the HSA savings? Do they just remain in suspended animation until the person can get new insurance and make regular payments again? Can a person draw on their HSA savings while they don’t have the insurance? Does the HSA become a de facto IRA?
Sue,
You’re a kook.
If you were licensed you would be breaking the law with your goofy answers.
PLUS, it’s a serious ethics violation not providing “Full and Proper Disclosure” even if the client didn’t ask you. But if they come right out and ask you a question, under the law, you must provide correct answers.
I ask group salesmen, “You arn’t telling people that they can keep this group plan if they get so sick they can’t continue too work do you, I mean with your license an all?” They usually studder and say, “Of course not.”
Then I say, “It amazes me that people buy your insurance then.” These group salesmen are as goofy as you Sue and they say something like, “Usually they don’t ask.”
Ron, the baby’s insurance terminates just as fast if she doesn’t pay her HSA premium–actually faster because with group insurance she has 90 days after stopping coverage to get back in with no pre-existing condition exclusions. With individual coverage including HSAs she is subject to underwriting the minute her policy lapses. The one question I don’t understand is whether or not she will also lose the tax protection on the money in her HSA account if she drops the HSA insurance. That would be a nice kick, out of money, no insurance and owing the IRS for taxes on a non-qualified HSA account. By the way, you can’t pay premiums for HSA insurance out of your HSA account.
Sue,
Will the baby’s insurance terminate?
The legal answer is a 3 letter word that begins with “Y”, does that help?
Ron, I haven’t spent time on that question because it isn’t the issue. If the mother doesn’t switch to another insurance plan at the end of 18 months she will lose coverage and if she has to go to the individual insurance market vs. another group plan with HIPAA protection her baby may be uninsurable thanks to aggressive underwriting practices. If she could go to another group plan her baby stays fully insured by law and there are group plans available through associations which don’t require a person to be employed. But let’s assume that mother took out an HSA and then lost her job because she had to take care of the sick baby. She’d be paying her deductible out of the HSA account—a really sick baby would probably max the deductible. Then let’s say she senselessly has sex and gets pregnant again—whoops more out of pocket expense. She runs out of money and stops paying premiums. Bam! her baby is uninsurable for life–hopefully her state has legislated a high risk pool that she can join. The issue is that neither HSAs nor group insurance really offer long-term protection for anyone who can’t keep writing checks for premiums and/or out-of-pocket medical expense. Instead of promoting HSAs as a cure-all quick fix, it would be better to look at long-term solutions which adequately insure against costs of health care when chronic illness strikes. The HSA solution only really works if people have a lot of healthy years before they have sick ones and it really won’t work if people are conned into joining HSAs without really understanding the trade-offs they are making. This is a plan where the individual is taking on the financial risk traditionally covered by the insurer. For mature folks who understand that, it is a good alternative that saves premium cost but for people who see it simply as a cheaper premium without understanding that they have other financial obligations it may be a bad choice because once you take an HSA if you ever lapse on the insurance payments you open the door to have any serious medical conditions excluded from covered expenses. Personally, I’d love to see an insurance plan that eliminates underwriting in exchange for the high deductible. That way both the insurer and the insured are sharing risk. I also think a payment method where the insured pays straight the provider on deductible expenses would be more efficient that insurer claims processing. But no one is talking about how non-value added cost can be removed from the system. We are limiting ourselves to insurance industry provided choices.
Nice dodge of the question Sue
I answer your questions but you won’t answer one of mine, figures.
Question Sue; If a mother has her insurance at her employer and quits to take care of a sick baby, will the baby’s insurance be terminated in just 18 short months?
Sue you sound exactly like a “Group” insurance salesman.
Ron,
Thanks for your response: //You ask if none covered expenses apply to the deductible.
The answer is no, only covered expenses apply to the deductible with any insurance.//
I knew that–I just wanted to make sure everyone else understood. To reiterate the math, a person with an HSA without the maternity rider who wants to have children is looking at their standard deductible, PLUS all the maternity expenses (typically about $6-8K) PLUS any expenses tied to underwriting exclusions. RDG you’d better start understanding how your HSA defines miscarriage because it gives them a nice loophole for excluding coverage of emergency pregnancy complications that would otherwise be covered even with the maternity exclusion. Welcome to the world of individual health care cost responsibility. The great thing about HSAs is that with the sticker shock families will be getting with maternity cost outlays, perhaps we’ll have less families have babies that they can’t afford. In Ron’s mother quitting work to care for sick baby and losing insurance example, the mother’s insurance coverage probably enabled her to foolishly get pregnant in the first place at minimal expense. Now women will have to think carefully about the costs associated with having children and perhaps those who can’t afford the front-end fees will practice better family planning.
rdg,
That is great you were approved for you HSA individual insurance in just 5 days.
Now don’t ever go on a dangerous employee group plan again. I know you won’t, you seem pretty informed.
Isn’t it amazing that your group plan cost $850 a month and the individual insurance cost $150 a month and uninformed people, and the media, say that group is less expensive than individual? It’s just all propaganda.
//I say destabilize the market. The faster the better//
Me too. Group health plans terminating young women’s health insurance, with cancer, because they are too sick too work is immoral. I say let’s protect the citizen and hold these group health plans feet to the fire and make them pay the bills.
In other news yesterday, Iowa passed sweeping Medicaid reform that enables HSAs as an option in Medicaid for the poor. Iowa is the first state to offer HSAs in Medicaid. We have been advertising MSAs and HSAs on WHO Radio 1040 in Des Moines, during Rush and on the Jan Mickelson show, since 1997. I have been a guest on Jan’s show which is syndicated to Cedar Rapids. Jan interviewed President Bush last month on Social Security and changed the subject to HSAs. If you are a going to run for President in ’08 you better bone up on HSAs because you must start in Iowa.
Democratic Gov. Vilsack of Iowa is running for President in ’08 and he said of the tax free HSA Medicaid Reform, “This is extraordinaryily unique. It’s the cutting edge, and it is all about providing opportunity for quality health care to Iowans.”
At the first Presidential debate for President, then Gov. Bush started his remarks by saying, “I believe in more choices, more options, more freedom in Medicare, including Medical Savings Accounts (MSAs now HSAs).”
The MSA is coming back. The HSA in Medicare is called the “Medicare” Savings Account. Now that Medicaid is reformed to include HSAs it’s time to move on to Medicare reform with HSAs.
It’s nice that liberal Democratic Gov. Vilsack is on the HSA bandwagon too, finally.
Iowa’s Medicaid reform with HSAs would have never been enacted into law without Jan Mickelson.
Thank you Jan. (And Pauline at WHO.)
Jan’s email is: mickelson@netins.net
theorajones,
you say //HSAs are pretty complex, have lots of loopholes (depending on which state you are in, depending if it’s employer based, or individual) and don’t necessarily cover lots of conditions//
This is all hogwash. HSA banks don’t care if it’s individual insurance or group, the HSA is exactly the same. What condition have you found that you can’t use HSA funds on? But you never answer any questions anyway.
//one thing that you won’t be able to mitigate is the fact that this is a comparatively new and untried insurance product//
Rumor is our insurance company had the first health insurance product in America, in 1913. And it was not group insurance but individual. This is our 9th year enrolling the tax free accounts, we were the first in America with a product. I agree, don’t get an insurance company that’s only been in the HSA business for 9 months, like all of our competition.
//I’d talk to a smart traditional insurance agent and ask him why I shouldn’t buy an HSA instead of his insurance//
Yes you should theorajones and then your HSA attacks may be better informed. Please call one right away and post his comments here. Find a really smart one.
//Oh, and also, there’s the moral issue that you’re helping to destabilize the insurance market for the sick by pulling yourself out of it//
You are so confused theorajones. rdg isn’t pulling himself out of the group health plan he was terminated by them and put to COBRA which will terminate too.
ANSWER ONE QUESTION THEORAJONES: If a mother has insurance at her employer and has a sick baby, can she quit her job and take care of the baby and keep the insurance on that sick baby for more than 18 months?
Sue,
You ask if none covered expenses apply to the deductible.
The answer is no, only covered expenses apply to the deductible with any insurance.