I had two interesting questions asked to me the other day by an employer. He simply wanted to know, “Can an employer continue to contribute to a Health Savings Account if they’re on COBRA?” and “Can the employee use their Health Savings Account to pay for their COBRA Benefits.
The Simple Answer… Yes (With some guidelines of course).
To answer the first question.
There are no restrictions to an employee on COBRA that wants to continue contributing to their Health Savings Account. The employer is no longer responsible for their contribution but the employee can continue as they see fit.
http://www.ustreas.gov/offices/public-affairs/hsa/faq_using.shtml
Now to answer the second question.
As per the U.S. Treasury “You can only use your HSA to pay health insurance premiums if you are collecting Federal or State unemployment benefits, or you have COBRA continuation coverage through a former employer.”
Pretty Straight Forward… If you’re on unemployment or COBRA you can use your Health Savings Account to pay your premiums.
So this technically leaves open an opportunity for someone on COBRA to pay there health insurance 100% tax free.
Think about it, if your premium is $300 a month on COBRA.
You could contribute $300 to your Health Savings Account (Get the Tax Deduction) then use the Tax-Free Money to pay for your COBRA Benefits.
Not bad, for most people this is the only opportunity for you to Take Advantage of 100% Tax Free Money. Obviously talk to you accountant first because I am not one. But this poses an interesting option.
If you have any questions you can reach me at (631) 338- 9917.
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Monday, March 15, 2010
Monday, March 1, 2010
Hoosiers and Health Savings Accounts (WSJ ARTICLE)
Instead of writing an Article this week, I thought I would share with you a great Article Emailed to me that was in the Wall Street Journal written by the governor of Indiana Mitch Daniels.
Hoosiers and Health Savings Accounts
OPINION MARCH 1, 2010, 8:51 A.M. ET
An Indiana experiment that is reducing costs for the state and its employees.
By MITCH DANIELS
As Washington prepares to revisit the subject of health-care reform, perhaps some fresh experience from Middle America would be of value. When I was elected governor of Indiana five years ago, I asked that a consumer-directed health insurance option, or Health Savings Account (HSA), be added to the conventional plans then available to state employees. I thought this additional choice might work well for at least a few of my co-workers, and in the first year some 4% of us signed up for it.
In Indiana's HSA, the state deposits $2,750 per year into an account controlled by the employee, out of which he pays all his health bills. Indiana covers the premium for the plan. The intent is that participants will become more cost-conscious and careful about overpayment or overutilization.
Unused funds in the account—to date some $30 million or about $2,000 per employee and growing fast—are the worker's permanent property. For the very small number of employees (about 6% last year) who use their entire account balance, the state shares further health costs up to an out-of-pocket maximum of $8,000, after which the employee is completely
protected.
The HSA option has proven highly popular. This year, over 70% of our 30,000 Indiana state workers chose it, by far the highest in public-sector America. Due to the rejection of these plans by government unions, the average use of HSAs in the public sector across the country is just 2%.
What we, and independent health-care experts at Mercer Consulting, have found is that individually owned and directed health-care coverage has a startlingly positive effect on costs for both employees and the state. What follows is a summary of our experience:
State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. In the second straight year in which we've been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay. (Even
if an employee had health issues and incurred the maximum out-of-pocket expenses, he would still be hundreds of dollars ahead.) HSA customers seem highly satisfied; only 3% have opted to switch back to the PPO.
The state is saving, too. In a time of severe budgetary stress, Indiana will save at least $20 million in 2010 because of our high HSA enrollment. Mercer calculates the state's total costs are being reduced by 11% solely due to the HSA option.
Most important, we are seeing significant changes in behavior, and consequently lower total costs. In 2009, for example, state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with traditional health care. They were much more likely to use generic drugs than those enrolled in the conventional plan, resulting in an
average lower cost per prescription of $18. They were admitted to hospitals less than half as frequently as their colleagues. Differences in health status between the groups account for part of this disparity, but consumer decision-making is, we've found, also a major factor.
Overall, participants in our new plan ran up only $65 in cost for every $100 incurred by their associates under the old coverage. Are HSA participants denying themselves needed care in order to save money? The answer, as far as the state of Indiana and Mercer Consulting can find, is no. There is no evidence HSA members are more likely to defer needed care or common-sense preventive measures such as routine physicals or mammograms.
It turns out that, when someone is spending his own money alone for routine expenses, he is far more likely to ask the questions he would ask if purchasing any other good or service: "Is there a generic version of that drug?" "Didn't I take that same test just recently?" "Where can I get the colonoscopy at the best price?"
By contrast, the prevalent model of health plans in this country in effect signals individuals they can buy health care on someone else's credit card. A fast-food meal costs most Americans more out of pocket than a visit to the doctor. What seems free will always be overconsumed, compared to the choices a normal consumer would make. Hence our plan's immense savings.
The Indiana experience confirms what common sense already tells us: A system built on "cost-plus" reimbursement (i.e., the more a physician does, the more he or she gets paid) coupled with "free" to the purchaser consumption, is a machine perfectly designed to overconsume and overspend. It will never be controlled by top-down balloon-squeezing by insurance companies or the government. There will be no meaningful cost control until we are all cost controllers in our own right.
Americans can make sound, thrifty decisions about their own health. If national policy trusted and encouraged them to do so, our skyrocketing health-care costs would decelerate.
Mr. Daniels, a Republican, is governor of Indiana.
For more Wall Street Journal Articles please visit www.WSJ.com
Its an interesting take on an idea that unfortunately the rest of the country has been slow to realize.
For more information you can contact me at 631-338-9917.
Related Posts: What's a H.R.A & How is it different then an H.S.A?
Related Posts: What's the difference between an H.S.A & a F.S.A?
Related Posts: Should I consider a High Deductible Plan?
Related Posts: What's a Health Savings Account (H.S.A) and why I should consider one
Related Posts: Using a Health Savings Account to pay for Cobra
Hoosiers and Health Savings Accounts
OPINION MARCH 1, 2010, 8:51 A.M. ET
An Indiana experiment that is reducing costs for the state and its employees.
By MITCH DANIELS
As Washington prepares to revisit the subject of health-care reform, perhaps some fresh experience from Middle America would be of value. When I was elected governor of Indiana five years ago, I asked that a consumer-directed health insurance option, or Health Savings Account (HSA), be added to the conventional plans then available to state employees. I thought this additional choice might work well for at least a few of my co-workers, and in the first year some 4% of us signed up for it.
In Indiana's HSA, the state deposits $2,750 per year into an account controlled by the employee, out of which he pays all his health bills. Indiana covers the premium for the plan. The intent is that participants will become more cost-conscious and careful about overpayment or overutilization.
Unused funds in the account—to date some $30 million or about $2,000 per employee and growing fast—are the worker's permanent property. For the very small number of employees (about 6% last year) who use their entire account balance, the state shares further health costs up to an out-of-pocket maximum of $8,000, after which the employee is completely
protected.
The HSA option has proven highly popular. This year, over 70% of our 30,000 Indiana state workers chose it, by far the highest in public-sector America. Due to the rejection of these plans by government unions, the average use of HSAs in the public sector across the country is just 2%.
What we, and independent health-care experts at Mercer Consulting, have found is that individually owned and directed health-care coverage has a startlingly positive effect on costs for both employees and the state. What follows is a summary of our experience:
State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. In the second straight year in which we've been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay. (Even
if an employee had health issues and incurred the maximum out-of-pocket expenses, he would still be hundreds of dollars ahead.) HSA customers seem highly satisfied; only 3% have opted to switch back to the PPO.
The state is saving, too. In a time of severe budgetary stress, Indiana will save at least $20 million in 2010 because of our high HSA enrollment. Mercer calculates the state's total costs are being reduced by 11% solely due to the HSA option.
Most important, we are seeing significant changes in behavior, and consequently lower total costs. In 2009, for example, state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with traditional health care. They were much more likely to use generic drugs than those enrolled in the conventional plan, resulting in an
average lower cost per prescription of $18. They were admitted to hospitals less than half as frequently as their colleagues. Differences in health status between the groups account for part of this disparity, but consumer decision-making is, we've found, also a major factor.
Overall, participants in our new plan ran up only $65 in cost for every $100 incurred by their associates under the old coverage. Are HSA participants denying themselves needed care in order to save money? The answer, as far as the state of Indiana and Mercer Consulting can find, is no. There is no evidence HSA members are more likely to defer needed care or common-sense preventive measures such as routine physicals or mammograms.
It turns out that, when someone is spending his own money alone for routine expenses, he is far more likely to ask the questions he would ask if purchasing any other good or service: "Is there a generic version of that drug?" "Didn't I take that same test just recently?" "Where can I get the colonoscopy at the best price?"
By contrast, the prevalent model of health plans in this country in effect signals individuals they can buy health care on someone else's credit card. A fast-food meal costs most Americans more out of pocket than a visit to the doctor. What seems free will always be overconsumed, compared to the choices a normal consumer would make. Hence our plan's immense savings.
The Indiana experience confirms what common sense already tells us: A system built on "cost-plus" reimbursement (i.e., the more a physician does, the more he or she gets paid) coupled with "free" to the purchaser consumption, is a machine perfectly designed to overconsume and overspend. It will never be controlled by top-down balloon-squeezing by insurance companies or the government. There will be no meaningful cost control until we are all cost controllers in our own right.
Americans can make sound, thrifty decisions about their own health. If national policy trusted and encouraged them to do so, our skyrocketing health-care costs would decelerate.
Mr. Daniels, a Republican, is governor of Indiana.
For more Wall Street Journal Articles please visit www.WSJ.com
Its an interesting take on an idea that unfortunately the rest of the country has been slow to realize.
For more information you can contact me at 631-338-9917.
Related Posts: What's a H.R.A & How is it different then an H.S.A?
Related Posts: What's the difference between an H.S.A & a F.S.A?
Related Posts: Should I consider a High Deductible Plan?
Related Posts: What's a Health Savings Account (H.S.A) and why I should consider one
Related Posts: Using a Health Savings Account to pay for Cobra
Monday, February 22, 2010
How to structure a Wellness Program for your company to help keep your employees active and healthy.
Recently we’ve implemented a few wellness plans for some of our clients, and I’ve come to the conclusion that most business owners aren’t 100% sure what a Wellness Program actually is.
So, I figured I’d take a few moments to talk about an idea or 2 to further explain how Wellness programs work.
If your company is above 100 employees you are considered a large group and multiple factors are taken when obtaining health insurance coverage. At this size you are individually underwritten, and certain things are set in stone, the number of employees, their ages, medical histories etc.
But the one variable is… Claims History.
When an insurance company is calculating your renewal they are going to look at the amount of claims that were put through the prior year.
So, if your group is healthy and doesn’t go to the doctor very often, you will get a much cheaper renewal then a group that has very high claims.
Many people tell me “Well when a person gets sick they go to the doctor, what can I do about it?"
My answer is, nothing. If someone is sick, catches a cold, or needs an operation, they have to have one, but a persons weight, activity and eating habits have a huge impact on the persons overall well being. If you put a plan in place to help people to stop smoking or lose weight with incentives, the amount of times they go to the doctor will go down and so will the claims.
For example:
We got one of our clients employees pedometers. Now for the next month they’ll all wear it and whoever walks the most steps will get a grand prize, say a day off, and the next 4 runners up will get a half a day off.
This encourages employees to walk more then usual, helping them to burn calories, improve lung function in a low impact way.
And you know what… Claims will decrease… So the employee gets something (Better Health and a day off) and the employer gets a health bill they can live with (Because we can’t get them a free health bill which they really want).
Its important to live a healthy life and small changes and incentives can make all the differences in your employees lives and your premiums.
If you have any questions you can reach me at (631) 338- 9917.
Related Posts: Are your employees well?
So, I figured I’d take a few moments to talk about an idea or 2 to further explain how Wellness programs work.
If your company is above 100 employees you are considered a large group and multiple factors are taken when obtaining health insurance coverage. At this size you are individually underwritten, and certain things are set in stone, the number of employees, their ages, medical histories etc.
But the one variable is… Claims History.
When an insurance company is calculating your renewal they are going to look at the amount of claims that were put through the prior year.
So, if your group is healthy and doesn’t go to the doctor very often, you will get a much cheaper renewal then a group that has very high claims.
Many people tell me “Well when a person gets sick they go to the doctor, what can I do about it?"
My answer is, nothing. If someone is sick, catches a cold, or needs an operation, they have to have one, but a persons weight, activity and eating habits have a huge impact on the persons overall well being. If you put a plan in place to help people to stop smoking or lose weight with incentives, the amount of times they go to the doctor will go down and so will the claims.
For example:
We got one of our clients employees pedometers. Now for the next month they’ll all wear it and whoever walks the most steps will get a grand prize, say a day off, and the next 4 runners up will get a half a day off.
This encourages employees to walk more then usual, helping them to burn calories, improve lung function in a low impact way.
And you know what… Claims will decrease… So the employee gets something (Better Health and a day off) and the employer gets a health bill they can live with (Because we can’t get them a free health bill which they really want).
Its important to live a healthy life and small changes and incentives can make all the differences in your employees lives and your premiums.
If you have any questions you can reach me at (631) 338- 9917.
Related Posts: Are your employees well?
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