RISING HEALTH INSURANCE COSTS CURED With HSA, HRA, FSA Health Savings Account Fix High Deductible Plans
The rising costs of healthcare is affecting everyone. As a healthcare provider, I see this not only from the perspective of the physician, but also from the side of a patient, as I and my family are also patients at time, and we have to buy health insurance as well. We all know that healthcare costs are rising, but how can we afford to keep the care that we want, the doctors that we want, and still afford to pay the premiums?
The good news is that the federal government has implemented plans and policies which will help any individual in the United States to better afford the health care coverage which they choose. It is up to us to learn more about these policies, and how they can help each of us and our families.
Let HSA be your friend. Health Insurance Plans are changing, premiums are increasing, deductibles are going up, maximum out of pocket costs are rising. That’s a fact, and the more educated patients become about the various plan options, and about government laws regarding health insurance, the better off they will be. Over the past several years, terms like high deductible have become more common, but along with that, the term HSA or Health Savings Account has also become more widely understood. There are several federally endorsed plans which are meant to help patients to better afford healthcare. The federal government of the United States has implemented these plans in order to help the people of the United States to be able to make health care more affordable.
The good news is that the Federal Government has implemented several programs to help protect patients, and shield them from some of the rising costs of healthcare. The three programs which will be discussed are 1) health savings accounts (HAS) , 2) health reimbursement accounts (HRA), and 3) flexible spending accounts. https://www.irs.gov/pub/irs-pdf/p969.pdf
• Health savings account (HSA) : According to the Federal Government, a health savings account (HAS) is a tax-exempt trust or custodial account which an employee can set up with a qualified HAS trustee to pay or reimburse certain medical expenses which they incur. The contributions remain in the employee’s account until they are used, and the interest or other earnings on the assets in the account are tax free. The HSA is “portable,” and remains with the employee if they change employers, or leave the workforce. To quality for an HSA, and employee must be covered under a high deductible health plan (HDHP). For 2015, the definition for an individual was a minimum annual deductible of $1,300 up to a maximum annual deductible and out of pocket expenses of $6,450. For a family, these numbers increase to $2,600 and $12,900, respectively. In 2015, the maximum contribution for individuals was $3,350, and $12,900 for families. Employees can receive tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses. It is not necessary to make distributions from the HSA each year, and the money which is in the HSA of the employee remain with that employee. Qualified medical expenses which are covered by the HSA are those expenses which would generally qualify for medical and dental expenses deduction. Medications are considered a qualified medical expense if it requires a prescription, or, in the case of an over the counter medicine, the employee receives a prescription for it.
• Flexible Spending Arrangement (FSA): A health flexible spending arrangement (FSA) is a program which allows employees to be reimbursed for medical expenses. They are typically funded through voluntary salary reductions, which are arranged with the employer. Contributions made to an FSA by an employer can be excluded from the employee’s gross income. There are no employment or federal income taxes deducted from the contributions. Employees can withdraw funds from the account to pay qualified medical expanses even if funds have not yet been placed in the account. Health FSA’s are employer established benefit plans, and may be offered with other employer-provided benefits as part of a cafeteria plan. For plans beginning after December 31, 2012, salary reductions contributions to an FSA cannot exceed $2,500 per year, or a lower amount if set by the plan. Money in the FSA which is not used by the end of the plan year is forfeited. Distributions from an FSA must be paid to reimburse for qualified medical expenses. An employee is entitled to receive the maximum amount of reimbursement at any time during a coverage period, regardless of the amount which had been already contributed.
Neurosurgeons Gary Kraus MD and Masaki Oishi MD, and the Kraus Back and Neck Institute work with patients with HSA, FSA and HRA plans. They treat patients from Houston, Sugarland, Woodlands, Katy, and other regions.