Monday, June 28, 2004
HSAs put consumers in control
[Julius A. Karash, "'I'm in control'," The Kansas City Star, 27 June 2004.]
This recent article from the Kansas City Star provides an excellent example of the potential benefits of Health Savings Accounts:
Michael J. Searcy, a fit 49-year-old, rarely needs health care beyond routine medical exams.
So it was highly unusual when Searcy, the head of an Overland Park financial services firm, drove himself to the St. Luke's South emergency room on a recent afternoon.
“I was doubled over,” Searcy recalled. “It was excruciating.”
The source of the agony was a kidney stone. Yet while Searcy's pain was searing, he didn't agonize over the emergency room bill. He felt confident that his needs would be covered by his high-deductible health insurance policy that's coupled with a new health savings account.
Health savings accounts represent the latest twist in what are known as consumer-driven health plans. As you might surmise, these plans are designed to save employers money and give employees incentives to control their health care spending.
Searcy wouldn't disclose exactly how much money he has in his account.
“It's enough to buy a modestly priced new car,” he said.
The money he puts in his account is tax-deductible. He pays no taxes on the accumulated savings or on money he takes out to pay for medical expenses. He can draw money from the account if he needs to or simply let it pile up.
“That's the beauty of this thing,” Searcy said. “If I want to dip into it, I can dip into it. If I want to write a check for part of it, I can. I'm in control.”
The problem arises when speculation begins about how the plans will only appeal to the "healthy and wealthy":
Randy McConnell, a spokesman for the Missouri Department of Insurance, said the department warns consumers to be wary.
He said health savings accounts are being pushed as a way to shift more health care costs to employees. He said the accounts “may be extremely good for someone who is a healthy young person and plans to remain that way. However, if you're in an accident or have a chronic illness that requires extensive medication, you will every year have to pay an extensive amount of money out of your own pocket.”
The reality is that HSAs can have great appeal to those who are less well-off and looking for a more cost-conscious alternative to traditional coverage. Depending on the structure of the HSA and high-deductible insurance plan, even those with ongoing illnesses can end up exposed to less out-of-pocket risk, while at the same time having greater control over their doctors and treatments.
[Julius A. Karash, "'I'm in control'," The Kansas City Star, 27 June 2004.]
This recent article from the Kansas City Star provides an excellent example of the potential benefits of Health Savings Accounts:
Michael J. Searcy, a fit 49-year-old, rarely needs health care beyond routine medical exams.
So it was highly unusual when Searcy, the head of an Overland Park financial services firm, drove himself to the St. Luke's South emergency room on a recent afternoon.
“I was doubled over,” Searcy recalled. “It was excruciating.”
The source of the agony was a kidney stone. Yet while Searcy's pain was searing, he didn't agonize over the emergency room bill. He felt confident that his needs would be covered by his high-deductible health insurance policy that's coupled with a new health savings account.
Health savings accounts represent the latest twist in what are known as consumer-driven health plans. As you might surmise, these plans are designed to save employers money and give employees incentives to control their health care spending.
Searcy wouldn't disclose exactly how much money he has in his account.
“It's enough to buy a modestly priced new car,” he said.
The money he puts in his account is tax-deductible. He pays no taxes on the accumulated savings or on money he takes out to pay for medical expenses. He can draw money from the account if he needs to or simply let it pile up.
“That's the beauty of this thing,” Searcy said. “If I want to dip into it, I can dip into it. If I want to write a check for part of it, I can. I'm in control.”
The problem arises when speculation begins about how the plans will only appeal to the "healthy and wealthy":
Randy McConnell, a spokesman for the Missouri Department of Insurance, said the department warns consumers to be wary.
He said health savings accounts are being pushed as a way to shift more health care costs to employees. He said the accounts “may be extremely good for someone who is a healthy young person and plans to remain that way. However, if you're in an accident or have a chronic illness that requires extensive medication, you will every year have to pay an extensive amount of money out of your own pocket.”
The reality is that HSAs can have great appeal to those who are less well-off and looking for a more cost-conscious alternative to traditional coverage. Depending on the structure of the HSA and high-deductible insurance plan, even those with ongoing illnesses can end up exposed to less out-of-pocket risk, while at the same time having greater control over their doctors and treatments.
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